Albert H. Nahmad, chairman and CEO, Watsco Inc.

“In many respects, we consider 2023 an exceptional year given the extraordinary performance during the two preceding years and considering the softer comparative market conditions that have followed,” he said today in a Q4 and full-year financial statement. “We achieved market share gains during a down market, scaled the adoption of Watsco’s technology-leading technology platforms, drove productivity gains, expanded our network.”

Nahmad added during an earnings call that he sees Watsco — which he noted has grown from $1 billion in annual revenue 20 years ago to over $7 billion today — doubling its current annual revenue over the long term.

‘We’re very ambitious; we always want to grow’

“We’re never satisfied — that’s part of our culture,” he said. “We’re very ambitious; we always want to grow.”

He added that changes in the HVAC industry, including more efficient HVAC systems and greater customer participation in improved digital commerce and fulfillment technology, is making for a prime growth opportunity.

“Markets are creating innovation for the first time in a long time — it’s exciting,” he said on the earnings call.

The company noted several 2023 performance metrics resulting from its customer-facing technology systems.

• Watsco ecommerce sales grew 5% year-over-year to $2.4 billion, to about 34% of total sales.
• Active ecommerce customers produced 50% less attrition than non-ecommerce users.
• The gross merchandise value of products sold on Watsco’s OnCallAir digital sales platform for contractors increased 28% to $1.2 billion, as quote volume expanded 14% to about 256,000 households.
• Watsco’s authenticated user community for HVAC Pro+ Mobile Apps expanded to approximately 55,000 users.

Nahmad also pointed to several digital technology investments Watsco has made in the past year.

• Pricing optimization software, providing analytics and insights on more than 200,000 SKUs that help Watsco “enhance competitiveness and improve margins.”
• Warehouse management and order fulfillment systems for accelerated order fulfillment and “faster and more reliable customer service.”
• Demand planning and inventory optimization tools to improve fulfillment rates and inventory turns.
• Logistics and operations software and expertise to facilitate more efficient product movement.

Watsco is ‘well-positioned’ to invest in growth

Going forward, executives said acquisitions will remain a key part of growth.

“Watsco remains well-positioned to invest in most any-sized opportunity to build further scale in the estimated $60 billion highly fragmented North American HVAC/R distribution market,” the company said.

Since 1989, Watsco has acquired 69 companies. Its three most recent acquisitions are:

• Capitol District Supply, acquired in March 2023. It generated 2023 revenue of about $13 million.
• Gateway Supply Co., acquired in September 2023, which generated 2023 revenue of $180 million.
• Commercial Specialists, acquired this month, generated 2023 revenue of about $13 million.

As Watsco grows through acquisition, it will seek to gain market share by brands in each market it enters, Nahmad said.

Watsco operates a distribution network with 692 North American locations serving over 125,000 contractors across the United States, Canada, Mexico, Puerto Rico, and other markets in Latin America.

Watsco reported for the fourth quarter ended Dec. 31:

• Total sales grew 1% year over year to a record $1.60 billion.
• Gross profit declined 4.4% to $414.16 million for a gross profit margin of 25.8%.
• Net income declined 37.8% to $97.74 million.

For the full year, Watsco reported:

• Watsco ecommerce sales grew 5% year-over-year to $2.4 billion.
• Watsco ecommerce represented about 34% of total sales.
• Total sales were slack at $7.28 billion, compared to $7.27 billion.
• Net income declined 9.9% to $634.14 million.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s Watsco report.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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Jeff McLendon, president and CEO, Specialty Building Products

“We care about our dealer customers’ success,” he says. “And with ecommerce penetration at less than 1% amongst the average LBM dealer, we took it upon ourselves to bring a best-in-class solution to our customers.”

Specialty Building Products has teamed up with Toolbx Inc. to provide its network of dealers access to Toolbx’s digital commerce platform and related technology integration services.

Toolbx’s services include integrating digital commerce technology applications — including shopping carts, quoting, customer records, product catalogs and payments — with  dealers’ enterprise resource planning systems, including Epicor BisTrack, DMSi, Intuit Quickbooks and Oracle NetSuite and Sandbox.

Erik Bornstein, CEO and cofounder of Toolbx, says the Toolbx digital platform is designed with “a suite of customer-facing tools that enable [dealers] to streamline operations, enhance customer service, and boost loyalty among their Pro or retail segment.”

Customers include The Home Depot and Do It Best

SPB has several operating brands, including U.S. Lumber, Alexandria Moulding, DW Distribution, Millwork Sales, Amerhart and Reeb, that provide LBM dealers with lumber, custom manufacturing and assembly of specialty building materials like doors, cabinets and outdoor decks, and marketing and distribution services.

McLendon says that “a number of our customers are already using Toolbx, and we want to make our product data available to them through Toolbx.” SPB and Toolbx did disclose the terms of their cooperative arrangement.

SPB’s largest customers include The Home Depot, Do It Best, Carter Lumber, Builders FirstSource and ABC Supply Co.

Toolbx notes on its website that it charges monthly subscription fees starting at $1,299 for its Commerce Pro system, which includes ecommerce, catalog development and support for onboarding customers. Its higher-end Pro Integrated version adds additional features, including syncing  orders, price & inventory, invoice & payment, and customer tiers and accounts. It doesn’t publicize Pro Integrated’s fees.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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Brad Jacobs, managing partner, Jacobs Private Equity.

And the entrepreneur, Brad Jacobs — who says he has completed approximately 500 merger and acquisition deals in his career, and built five multibillion-dollar, publicly traded companies — is counting on B2B ecommerce and digital transformation technology to help him pull it off.

Yesterday, Jacobs unveiled QXO Inc. as a digital technology company with plans to build and acquire distribution companies. Jacobs says he’s targeting the highly fragmented $800 billion North America and Europe building products distribution market.

QXO follows several other companies Jacobs has been involved in launching: XPO Inc., one of the largest providers of truckload services in North America, where he is executive chairman; GXO Logistics Inc., a global contract logistics provider using “data-driven processes, intelligent automation and machine learning” technology; RXO Inc., a technology-enabled freight brokerage platform; United Rentals Inc., a big equipment rental company; and United Waste Systems Inc., a large waste management company which was later sold.

Distributors of building products sell such categories as access control, construction supplies, doors and windows, electrical components, fencing and decking, HVAC equipment, landscaping, lumber, plumbing, pools, roofing and siding, and water.

Jacobs says he expects QXO to achieve revenue of at least $1 billion its first year in business and $5 billion within three years. To hit those numbers, the company says it will focus heavily on digital technology — and B2B ecommerce.

To create QXO,  Jacobs Private Equity, which is led by Jacobs, has entered into a $1 billion investment agreement with other investors and SilverSun Technologies, a public business management applications and technologies and professional consulting services company. The proposed investment is comprised of $900 million by JPE and $100 million by co-investors, including Sequoia Heritage, JPE says.

Targeting the fragmented building products industry

Under the terms of the investment, SilverSun will be renamed QXO and Jacobs will become the company’s chair and chief executive officer.

“The industry’s nascent use of technology, particularly artificial intelligence (AI) and B2B ecommerce, represents a compelling opportunity for tech-focused entrants,” Jacobs Private Equity says. “According to industry data, the percentage of industry revenue derived from ecommerce is currently only mid-single digits, and this share is expected to triple by 2030.”

JPE notes that the building products distribution industry is highly fragmented, with approximately 7,000 distributors in North America and 13,000 in Europe.

“The industry has generated compound annual revenue growth of 7% over the last five years, based on industry data, and continues to benefit from powerful secular growth drivers for building products distribution in the residential, nonresidential and infrastructure sectors,” JPE says.

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Trends and Facts from the Next 1000 Hardware & Home Improvement online retailers:

• Next 1000 Hardware & Home Improvement online retailers grew online sales 6.8% in 2022.
• Next 1000 Hardware & Home Improvement online retailers sold over $1 billion online in goods in 2022.
• Total retail sales for Hardware & Home Improvement in the U.S. grew 6.3% in 2022.
• Total retail sales for Hardware & Home Improvement in the U.S. reached $530 billion in 2022.

Top 5 online retailers in the category:

• Tekton Inc. (No. 1,007)
• In the Swim (No. 1,008)
• Stark Bro’s Nurseries & Orchards Co. (No. 1,020)
• Cyberweld (No. 1,034)
• Proven Winners LLC (No. 1,044)

Shopper demographics in the category:

• Ages 18 to 24: 12% of shoppers
• Ages 25 to 34: 20% of shoppers
• Ages 35 to 44: 19% of shoppers
• Ages 45 to 54: 18% of shoppers
• Ages 55 to 64: 18% of shoppers
• Ages 65 and up: 14% of shoppers

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Lowe’s online sales had grown for the last 14 quarters before this most recent quarter.

Home Depot ranks No. 4 in the Top 1000, Digital Commerce 360’s ranking of North America’s online retailers by web sales. Lowe’s ranks No. 12 in the Top 1000.

Home Depot revenue and sales

Home Depot reported sales declined 3% to $37.7 billion in the third quarter. Total comparable sales declined 3.1%, and U.S. comparable sales declined 3.5%. 

Net earnings also declined, to $3.8 billion from $4.3 billion in the year-ago period. The home improvement retailer managed to grow online sales while many other metrics declined. 

“We continued to invest in the digital experience across our website and app and released a variety of enhancements in the third quarter. These range from simple improvements to help customers track orders to more complex things like updating our search and recommendation algorithms,” Billy Bastek, executive vice president of merchandising, said in a call with investors.

Nearly half of online orders were fulfilled by stores, Home Depot said. The retailer also noted it achieved record Halloween sales both in stores and online.

Lowe’s revenue and sales

Lowe’s reported total sales declined 12.8% to $20.5 billion in the quarter. Comparable sales fell 7.4% due to a decline in DIY discretionary spending, although that was partially offset by growth in comparable sales to professional customers.

“Given our 75% DIY mix, the DIY pressure disproportionately impacted our third quarter comp performance. At the same time, our investments in Pro continue to resonate, resulting in positive Pro comps again this quarter,” president and CEO Marvin Ellison said in a written statement.

The retailer says it is tripling the space dedicated to BOPIS (buy online, pick up in store) purchases to make the process faster and easier for consumers.

Big purchases remain on hold

Executives at both home improvement retailers noted that consumers remain reluctant to embark on large and expensive home projects. 

“We saw a continuation of a trend that we have been observing throughout the year, with softness in certain big-ticket, discretionary-type purchases. Instead of engaging in larger projects, customers continue to take on smaller projects,” Home Depot’s Bastek told investors.

Purchases of $1,000 or more declined 5.2% year over year, after declining 5.5% in Q2. Sales of home renovation items like flooring, countertops, and cabinets have all muted, Bastek said. However, big-ticket sales to professionals remained healthy, including roofing, insulation, and portable power, he said.

Lowe’s also reported that home repairs remained a strong source of sales. Building materials like roofing and drywall grew among professional customers, the retailer said.  Like Home Depot, Lowe’s reported that appliances, flooring, and kitchen and bath materials sold more slowly this quarter.

Home Depot and Lowe’s both serve a mix of B2B and DIY consumers online and in stores. Home Depot historically has more professionals, with sales split about 50-50, while Lowe’s makes about one-quarter of sales to home professionals.

How do Home Depot and Lowe’s compare?

In Q2, Lowe’s appeared to be catching up to Home Depot in terms of online sales.

However, “Lowe’s is now performing much worse than rival Home Depot,” says Neil Saunders, managing director of retail analysis firm GlobalData. “And this comes despite the fact Lowe’s has a more embryonic professional segment, which remained in growth this quarter. What this means is that demand from the core DIY consumer has slumped and Lowe’s is bearing the brunt of this pullback.”

Neither retailer discloses what percentage of sales are made online. Both are facing the same headwinds of high housing prices and declining consumer spending. 

“We expect the overall demand environment for home improvement to remain choppy for the rest of 2023 and possibly into early 2023, as consumers spend more on travel and entertainment after the buying binge for home improvement during the pandemic,” says Brian Yarbrough, senior analyst at financial investment firm Edward Jones.

Home Depot earnings

For the fiscal third quarter ended Oct. 29, 2023, Home Depot reported:

• Total sales declined 3% year over year to $37.7 billion.
• Home Depot online sales grew 5%. 
• Comparable sales declined 3.1%.
• Net earnings were $3.8 billion.

Lowe’s earnings

For the fiscal third quarter ended Nov. 3, 2023, Lowe’s reported:

• Total sales declined 12.8% to $20.5 billion.
• Online sales declined 4%.
• Comparable sales declined 7.4%.
• Net earnings were $1.8 billion.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports.

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Parentheses indicate the merchant’s ranking in the Top 1000.

Amazon.com Inc. (No. 1)

Amazon recorded its highest operating income ever in its fiscal third quarter ended Sept. 30. Operating income nearly quadrupled year over year, growing 343%.

Read more about Amazon’s earnings here.

Bath & Body Works Inc. (No. 56)

Bath & Body Works reported net sales declined 2.6% to $1.6 billion in its fiscal third quarter ended Oct. 28. The retailer has a “strong profitable digital business,” CEO Gina Boswell told investors without sharing specific details. However, the retailer sees opportunity to expand its digital footprint by “moving from a largely transactional website and app, to more personalized, experiential, and integrated platforms,” she said. Conversion, including the use of BOPIS (buy online, pick up in store), grew 4% in Q3 over Q2, the retailer said.

Brilliant Earth LLC (No. 201)

Brilliant Earth reported net sales grew 2.5% to $114.2 million in the third quarter ended Sept. 30. Order volume increased 17%, the jewelry retailer said. So far, Brilliant Earth is seeing “strong momentum” at the start of the holiday season, CEO Beth Gerstein said.

The Gap Inc. (No. 20)

Gap reported net sales decreased 7% to $3.8 billion in its fiscal third quarter ended Oct. 28. Online sales declined 8% and made up 38% of total sales. Old Navy had the highest net sales of the retailer’s four brands, at $2.13 billion, down 1% year over year. Gap, Banana Republic, and Athleta sales declined 15%, 11%, and 18%, respectively.

Grove Collaborative (No. 281)

Grove Collaborative reported net revenue declined 20.6% to $61.8 million in the third quarter ended Sept. 30. Direct-to-consumer orders declined 26.2% to 917,000 in the quarter, though net revenue per order decreased. The decline was due to lower advertising spending, the retailer said. 

The Home Depot Inc. (No. 4)

Home Depot reported sales declined 3% to $37.7 billion in the third quarter ended Oct. 29. Online sales grew 5%, the retailer said without revealing more. Nearly half of online orders were fulfilled by stores, Home Depot said.

The retailer also noted it achieved record Halloween sales both in stores and online.

Macy’s Inc. (No. 17)

Macy’s reported net sales declined 7% to $5 billion in the third quarter ended Oct. 28. Digital sales and brick-and-mortar sales declined at the same rate. Macy’s online marketplace is growing, with GMV (gross merchandise volume) up 22% over Q2, the retailer said.

The average customer “continues to be under pressure and discerning and how they spend in discretionary categories we offer,” CEO Tony Spring told investors.

Sally Beauty Supply LLC (No. 522)

Sally Beauty reported net sales declined 4.3% to $921 million in its fiscal fourth quarter ended Sept. 30. Net sales declined 2.3% to $3.7 billion for the year. Ecommerce amounted to $87 million in Q4 sales, 9.4% of net sales. It also made up $348 million in annual sales. 

Target Corp. (No. 5)

Third-quarter sales declined 4.9% for the mass merchant, to $25 billion from $26.12 billion in its fiscal third quarter ended Oct. 28. Meanwhile, Target online sales decreased 6% year over year. Moreover, Target online sales declined 6.7% year over year for the first nine months.

Read more about Target’s earnings here.

TJX Cos. Inc. (No. 69)

TJX reported net sales grew 9% to $13.3 billion in its third quarter of fiscal 2024 ended Oct. 28. Comparable store sales grew 6%, driven by increases in traffic, the discount retailer said.

“Customer traffic was up across all divisions, our overall apparel sales remained very strong, and home sales were outstanding and accelerated sequentially versus the second quarter,” CEO Ernie Herrman said in a written statement.

Ecommerce remains a “very small percentage” of TJX’s total business, Herrman told investors. He said the retailer was pleased with ecommerce sales trends on its brands’ websites in the third quarter without revealing more. TJX shut down its ecommerce arm for HomeGoods in October.

Walmart Inc. (No. 2)

Walmart reported that U.S. online sales grew 24% for the fiscal 2024 third quarter ended Oct. 27. Global ecommerce sales grew 15% over the same period, while international ecommerce declined 3%.

U.S. comparable sales grew 4.9%, and total revenue grew 5.2% to $160.8 billion.

Read more on Walmart’s earnings here.

Williams-Sonoma Inc. (No. 22)

Williams-Sonoma reported net revenue declined to $1.8 billion in its fiscal third quarter ended Oct. 29. Comparable brand revenue declined 14.6%. The retailer didn’t share specific ecommerce figures, but it noted plans to improve the online experience for potential customers.

“We see many opportunities for our business from developments from AI. And as early adopters of integrating AI, we look forward to leading the retail industry in this area, and we will focus on quality, authenticity, and responsiveness of this new technology,” CEO Laura Alber told investors. 

So what does it mean?

• Retailers offering discounted prices, like Walmart and TJX, are still reporting growing sales and customer acquisition. That shows inflation and budgets remain top of mind for many consumers.
• Retailers, especially those selling discretionary items, are counting on holiday purchases in Q4 after lackluster quarters.

Ecommerce earnings calendar

Here’s when to expect other ecommerce earnings this quarter:

• Amazon.com Inc.: Oct. 26
• Best Buy Co Inc.: Nov. 21
• Chewy Inc.: Dec. 6
• Costco Wholesale Corp.: Dec. 14
• The Gap Inc.: Nov. 16
• The Home Depot Inc.: Nov. 14
• Lowe’s Cos Inc.: Nov. 21
• Macy’s Inc.: Nov. 16
• Target Corp.: Nov. 15
• Walmart Inc.: Nov. 16

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For the fiscal third quarter ended Sept. 30, Watsco said ecommerce sales rose about 15%. Watsco ecommerce sales accounted for about a third, or $702.9 million, of total sales of $2.1 billion. It also noted that ongoing improvements to its digital commerce technology and practices have resulted in a 19% expansion over the past 12 months to 54,000 customers with active ecommerce accounts.

“Our mobile platforms and ecommerce channels have increased customer engagement, reduced attrition, created market share gains, and supported our margin expansion,” chairman and CEO Albert Nahmad said on the company’s recent earnings call with investment analysts.

Watsco ecommerce sales

Nahmad said that Watsco has added over 400,000 new SKUs to its digital product library since the start of 2023. He noted that “approximately 60% of the HVAC systems we are now selling represent new products.”

Watsco notes that its product information management (PIM) database contains over 1.5 million SKUs. They’re available to more than 350,000 contractors and technicians.

In addition, Watsco makes available to professional customers its HVAC Pro+ mobile apps. They provide real-time information to such details as:

• Product specifications
• Technical support
• Inventory availability
• Warranty look-up and processing
• Access to ecommerce ordering

Watsco said it also increased online gross merchandise sales 31% year over year during the first nine months of this year. Those sales grew to $958 million through its OnCallAir digital sales platform and its companion CreditforComfort consumer-financing service.

Digital strategy supports margin strategy

Nahmad said the company’s digital technology strategy is supporting its long-term goals for improving gross profit margin to 30% (up from 26.7% in Q3) while also upgrading how it engages contractors and end customers.

Aaron (“A.J.”) Nahmad, president, said Watsco’s overall digital strategy enables the company “to do analytics on opportunities, enhance our capabilities, and measure and track our successes in all parts of our business — things like prospecting and winning new customers and changing and improving how customers engage with us with things like ecommerce in our apps, which eventually reduce our cost to serve those customers.”

Albert Nahmad asserted that, as Watsco’s financial position continues to improve, it “provides us the flexibility to invest in virtually any opportunity” in the $50 billion North American [HVAC] market.

He added that merger-and-acquisition activity “remains an important contributor” to Watsco’s growth and noted that, in Q3, the company acquired South Carolina-based Gateway Supply Co., a regional HVAC and plumbing supplies distributor, “giving us the ability to partner with great leadership to grow beyond their $180 million sales.” Gateway operates an ecommerce store for HVAC and plumbing supplies and offers contractors online Pro accounts.

Since 1989, Watsco has acquired 68 businesses.

Check back for more earnings reports. 

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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SmartEquip recently released the SmartEquip e-Commerce 2.0 as a technology platform, on which authorized distributors, dealers and fleet managers can operate their own branded self-service commerce store for selling construction parts from SmartEquip’s parts catalog network of more than 700 original equipment manufacturers. The company is a subsidiary of B2B marketplace company RB Global Inc., which also owns such organizations as construction equipment marketplace operator Ritchie Bros.

SmartEquip B2B ecommerce platform

Andrew Malion, president of braking equipment supplier Spectra Products Inc., says the SmartEquip product catalog helps his customers view descriptions and images of Spectra’s Brake Safe  products to ensure they order the correct parts for truck air brake diagnostic systems. Spectra Products recently joined the SmartEquip Network.

“Joining their network of suppliers and manufacturers is the ideal way to offer equipment owners our Brake Safe diagnostics tool,” he says.

Ron Piccolo, senior vice president of operations at Smart Equip, says Spectra Products is an example of the growth in the variety of suppliers in the SmartEquip Network.

In addition to several hundred OEM brands, the SmartEquip Network has over 95,000 users across more than 42,000 equipment locations globally, SmartEquip says.

The upgraded SmartEquip ecommerce store supports a mobile channel.

RB Global’s operations also include:

• Ritchie Bros., a global online auctioneer of commercial assets and construction vehicles.
• IAA, a global digital marketplace for motor vehicle buyers and sellers.
• Rouse Services, an asset management and performance benchmarking system.
• Xcirca, a live simulcast auction technology provider.
• Veritread, an online marketplace for heavy haul transport services.

RB Global took its current corporate name earlier this year, when it changed it from Ritchie Bros. Auctioneers Inc. For the year ended Dec. 31, 2022, the company reported $1.7 billion in total revenue. It also reported marketplace gross transaction value of $6.0 billion.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. paul@digitalcommerce360.com.

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Abercrombie & Fitch Co. (No. 59)

Abercrombie & Fitch reported net sales grew 16% in the fiscal second quarter ended July 29, 2023, to $935 million. Comparable sales grew 13%. Sales were split between Abercrombie brand and Hollister, at $462.7 million and $472.6 million, respectively. Abercrombie brand sales grew 26% year over year, and Hollister grew 8%. About one-third of Hollister sales happen online, the retailer said, with traffic and conversion both increasing year over year. 

Abercrombie is “more tilted toward digital” than Hollister, the retailer said without disclosing more. Online sales have a higher operating margin than in-store sales, it said.

Bath & Body Works Inc. (No. 56)

Bath & Body Works reported net sales declined 3.6% to $1.56 billion in the fiscal second quarter ended July 29, 2023. The retailer did not share how overall online sales compared to previous quarters. 

Bath & Body Works rolled out BOPIS in Q1 2023, and adoption grew 25% in Q2. About 30% of BOPIS customers also made an additional purchase when pickup up their orders, the retailer said.

“Delivering a seamless omnichannel experience will allow us to convert more single channel customers to dual channel customers, which, on average, increase spend threefold,” CEO Gina Boswell told investors.

BJ’s Wholesale Club (No. 68)

BJ’s reported that digitally enabled comparable sales grew 15% in the fiscal second quarter ended July 29, 2023. Comparable sales, meanwhile, grew 1.1% over the same period. Net sales declined 2.9%.

Online sales made up 10% of net sales in the quarter, BJ’s said. BOPIS and curbside orders were responsible for the majority of online growth, CEO Bob Eddy told investors.

“Our digitally enabled members are more loyal, as indicated by higher spending and renewal rates,” Eddy said.

Dick’s Sporting Goods (No. 32)

Dick’s Sporting Goods reported comparable sales grew 1.8% in the fiscal second quarter ended July 29, 2023. Transactions grew 2.8% during that period, and net sales grew 3.6%. The sports retailer did not share any information about how online sales fared in comparison to past quarters. 

“In combination with our stores, our digital experience remains an integral part of our success, and we continue to invest in technology to strengthen our athletes’ omnichannel experience,” CEO Lauren Hobart said.

Dick’s also expanded omnichannel offerings in the quarter to add same-day delivery, Hobart said.

Dollar Tree Inc. (No. 190)

Dollar Tree reported net sales grew 8.2% to $7.3 billion in the fiscal second quarter ended July 29, 2023. Same-store comparable sales increased 7.8% and 5.8% at Dollar Tree and Family Dollar, respectively. Both stores also saw increases in traffic during the quarter, though average ticket declined at Dollar Tree and grew at Family Dollar. 

Sales of discretionary items increased slightly at Dollar Tree, by 3.9%, as consumers trade down to dollar stores. Consumables saw the largest increase, with sales growing 11%.

Foot Locker Inc. (No. 51)

Foot Locker reported total sales declined 9.9% in the fiscal second quarter ended July 29, 2023. Comparable same-store sales declined 9.4% over the same period. 

Online sales accounted for 15.5% of total sales in the quarter, down slightly from 16.3% in Q1.

“Digital comps in our Foot Locker and Kids Foot Locker banners in North America were actually up during the quarter, with strength driven by increases in multiple conversions and new customer growth year over year,” the retailer said.

The Gap Inc. (No. 20)

Gap reported net sales declined 8% to $3.55 billion in the fiscal second quarter ended July 29, 2023. Online sales made up 33% of net sales.

Comparable sales declined 6%, and in-store sales decreased 7%. Online sales saw a larger decrease, down 11% year over year. 

Old Navy in particular is experiencing decreased demand from lower-income consumers, Gap said in a press release. The brand is not benefitting from consumers trading down from more expensive retailers, according to Katherine O’Connell, chief financial officer.

“Some of the brands that are really winning with our consumer are T.J. Maxx, Amazon, Shein,” she said.

Guess Inc. (No. 179)

Guess reported revenue increased 3% to $665 million in the fiscal second quarter ended July 29, 2023. Revenue in the Americas, including ecommerce, declined 6% while Europe and Asia revenue grew 9% and 19%, respectively.

The retailer did not reveal specifics about online sales, but it did say North American ecommerce performed better than store sales.

Kohl’s Corp. (No. 23)

Kohl’s reported net sales declined 4.8% to $3.7 billion in the fiscal second quarter ended July 29, 2023. Comparable sales declined 5.0%.

Online sales declined further, down 17% year over year to make up 25% of total sales. The decline can be attributed to Kohl’s eliminating online-only deals, the retailer said.

La-Z-Boy Inc. (No. 257)

La-Z-Boy reported total sales declined 20% to $482 million in its fiscal first quarter of 2024. Same-store sales grew 2%. Online sales of ecommerce furniture brand Joybird declined 17% year over year due to “more cautious online consumer demand,” the retailer said.

“In general, furniture consumers sort of hit that saturation point of who’s going to want to purchase online and who’s going to want to purchase in-store. And the majority of consumers do more in-store,” CEO Melinda Whittington said, according to a Seeking Alpha transcript.

Lowe’s Cos. Inc. (No. 12)

Lowe’s reported online sales grew 6.9% for the fiscal second quarter ended Aug. 4.

Lowe’s reported $25 billion in total sales for the quarter, declining 8.9% from $27.5 billion in 2022. Net earnings also declined, to $2.7 billion from $3 billion. Comparable sales also decreased 1.6% year over year, Lowe’s said. Read more here.

Macy’s Inc. (No. 17)

Macy’s reported online sales declined 10% in the fiscal second quarter ended July 29, 2023. Net sales declined 8% during the period to $5.13 billion. Brick-and-mortar store sales also declined 8% over the year-ago period. 

Read more here.

Nordstrom Inc. (No. 21)

Nordstrom reported net sales declined 8.3% in the second quarter ended July 29, 2023. Online sales declined 12.9%, making up 36% of total sales in the quarter.

Online sales also accounted for 60% of sales during the annual Anniversary Sale, Nordstrom said. 40% of those sales were either through BOPIS, ship to store or fulfilled by stores, the retailer said.

Petco Health and Wellness Company Inc. (No. 92)

Petco reported net revenue grew 3.4% to $1.53 billion in the fiscal second quarter ended July 29, 2023. Comparable sales grew 3.2%.

Online sales grew faster than in-store sales; they increased 9% and 2%, respectively. Consumable sales grew 7%, while the more discretionary supplies category declined 9%.

Urban Outfitters Inc. (No. 30)

Urban Outfitters reported net sales for the fiscal second quarter ended July 31, 2023, grew 7.5% to $1.27 billion.

Digital sales showed “mid-single-digit positive growth,” the retailer said in a statement. Anthropologie, Free People and FP Movement brands all had double-digits sales growth online. The Urban Outfitters brand recorded a double-digit sales decrease online.

Ulta Beauty (No. 46)

Ulta reported net sales increased 10.1% to $2.5 billion in the fiscal second quarter ended July 29, 2023. Comparable sales, which includes stores open at least 14 months and online sales, grew 8%. The Ulta app continued to drive sales, with 55% of online sales made on mobile.

The retailer is also focused on growing its omnichannel customers, who purchased 2.5 to three times more than single-channel customers. 

Williams-Sonoma Inc. (No. 22)

Williams-Sonoma reported comparable brand revenue declined 11.9% in the fiscal second quarter ended July 31, 2023. Revenue was flat over the comparable 2021 period, the retailer said.

Online sales make up about 66% of total sales, and Williams-Sonoma anticipates online sales eventually making up 70%.

So what does it mean?

• Consumers remain reluctant to spend discretionary income on goods, preferring to save or spend on experiences instead. That’s hitting apparel retailers particularly hard, while Dollar Tree is reaping the rewards. 
• La-Z-Boy CEO Melinda Whittington’s comment that online furniture may have hit a saturation point with retailers might be telling. Wayfair Inc. and Overstock.com Inc. both recently reported declining sales.

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Home Depot ranks No. 4 in the Top 1000, Digital Commerce 360’s ranking of North America’s online retailers by web sales. Lowe’s ranks No. 12 in the Top 1000.

Home Depot revenue and sales

Home Depot reported sales declined 2% year over year to $42.9 billion in the second quarter. Comparable sales were down 2%, too. Net earnings also declined, to $4.7 billion in 2023 from $5.2 billion in Q2 of 2022.

The home improvement retailer managed to grow online sales slightly, even as total sales declined. That also represents a change from Q1 of 2023, when online sales declined 2.9% year over year.

“We know the vast majority of our customers engage with us in an interconnected manner. Whether it be through project inspiration and research, transacting, fulfillment or support, our customers blend the physical and digital world,” Billy Bastek, Home Depot executive vice president of merchandising, told investors in a call.

Just under half of online orders were fulfilled through stores, he said. 

Lowe’s revenue and sales

Lowe’s reported $25 billion in total sales for the quarter, declining 8.9% from $27.5 billion in 2022. Net earnings also declined, to $2.7 billion from $3 billion. Comparable sales also decreased 1.6% year over year, Lowe’s said. 

Strong online sales and professional customers also offset lumber deflation and consumers pulling back on discretionary spending, Lowe’s said. About half of online sales are picked up in stores, the retailer said.

“Our investments in our Total Home strategy continued to drive growth across Pro and online this quarter,” Marvin Ellison, CEO and chairman, said in a statement.  “And we are excited by our recent launch of same-day delivery nationwide and the expansion of our rural merchandising framework to roughly 300 stores.”

Big purchases declined

Lowe’s and Home Depot executives both pointed to a pullback in consumer spending on large DIY projects in the quarter. Meanwhile, consumers remained willing to spend on smaller projects. 

“While there was strength in categories associated with smaller projects, we did see continued pressure in certain big-ticket, discretionary categories. We remain very positive on the medium-to-long-term outlook for home improvement and our ability to grow share in a large and fragmented market,” Bastek said. 

Transactions of $1,000 and up decreased 5.5%, Home Depot said.

“After three years of unprecedented demand in the home improvement market, we continue to see softer engagement in big-ticket discretionary categories like patio and appliances that likely reflects a pull forward of these single-item purchases and deferral,” Bastek said.

Home Depot and Lowe’s both serve a mix of B2B and DIY consumers. Home Depot historically has more professionals, with sales split about 50-50, while Lowe’s makes about one-quarter of sales to home professionals.

Many home projects and improvements that might have otherwise happened in 2022 and 2023 were pushed forward by consumers during the pandemic, growing the home improvement stores’ bottom lines, says Brian Yarbrough, senior analyst at financial investment firm Edward Jones. Those consumers are then not pursuing those projects this year, producing slowdowns for Home Depot and Lowe’s. However, an aging housing stock means that the long-term outlook for DIY and home improvement is good, Yarbrough says. 

Lowe’s is catching up to Home Depot in online sales

Although Lowe’s grew online sales at about six times the rate of Home Depot, it’s not a totally fair comparison, Yarbrough says. Until the last few years, Home Depot was “a step or maybe several steps ahead of where Lowe’s was. I think it’s Lowe’s kind of catching up, so it’s a smaller base, and probably that makes it easier to grow,” he said.

Neither retailer disclosed what percentage of total sales are made online. Digital penetration of home improvement retailers in the Top 1000 only reached 11.2% in 2022, up slightly from 10.8% in 2021.

“Lowe’s has always been playing catch up in online sales, but they’ve succeeded in using their network of stores to keep the pressure on Home Depot,” says James Risley, senior analyst at Digital Commerce 360. “Both retailers have consistently been able to fulfill around half their orders from stores since before the pandemic, using a more unified inventory system to help reduce fulfillment costs.”

Lowe’s invested in its online infrastructure, making it more capable of handling online orders. In the second quarter, Lowe’s improved online shopping experience and grew conversion, the retailer said without revealing more. It also added an online fit calculator and improved search and recommendations.

Lowe’s has been more active in advancing digital initiatives for the consumer market as well, with flashy in-store wayfinding in its app and room measuring tools using augmented reality.

“I think some of those tools push users into stores, so the fact that its online sales growth has been outpacing Home Depot still shows that those kinds of investments are paying off,” Risley says.

Home Depot earnings

For the fiscal second quarter ended July 30, 2023, Home Depot reported:

• Total sales declined 2% year over year to $42.9 billion.
• Home Depot online sales grew 1%. 
• Comparable sales declined 2%.
• Net earnings declined, to $4.7 billion in 2023 from $5.2 billion in Q2 of 2022.

Lowe’s earnings

For the fiscal second quarter ended August 4, 2023, Lowe’s reported:

• Total sales declined 8.9% to $25 billion.
• Net earnings declined from $3 billion in the year-ago period to $2.7 billion.
• Comparable sales declined 1.6%.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports.

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