Home Depot and Lowe's are standout winners of the pandemic — but experts are already focused on what a COVID-19 vaccine will mean for home improvement sales in 2021

  • Home Depot and Lowe's are continuing to post strong sales during the coronavirus pandemic.
  • Experts say that, in addition to consumer behavior changing during the pandemic, both companies have witnessed a strong fundamental demand thanks to aging housing stock.
  • While the soaring comparative store sales and investor expectations may be hard to beat in 2021, industry experts say that home improvement spending is unlikely to be quelled anytime soon.
  • Visit Business Insider's homepage for more stories.

Home Depot and Lowe's are continuing to thrive during the coronavirus pandemic, as Americans devote discretionary income to home improvement projects without frequent access to travel or entertainment.

On Tuesday, Home Depot beat analysts' estimates, with net sales growing 23.2% to $33.5 billion. Rival Lowe's missed Wall Street expectations causing its stock to drop Wednesday, but the company still managed to post a same-store sales spike of over 30% to $22.3 billion.

Despite meteoric sales growth this year, Home Depot's CEO Craig Menear told analysts on the company's earnings call this week that, "We see no correlation in the business as it relates to COVID cases."

Analysts, however, have already tied the surge in home improvement spending in 2020 to stay-at-home orders and rising COVID-19 cases across the country. And with recent news of the progress being made by companies like Pfizer and Moderna in creating a vaccine sending "stay-at-home-stocks" tumbling, some analysts are wondering what will happen to home improvement sales once the pandemic's stranglehold on daily life loosens.

Early reports suggest that millions of doses of a potential COVID-19 vaccine will be available by next spring — coinciding with the beginning of the 2021 home improvement season. Even if 2020 comparative store sales may be hard to match throughout the industry, analysts predict the demand for home improvement will likely continue to surge even after the virus is an unhappy memory. 

During the most recent round of earnings calls, analysts asked Home Depot and Lowe's executives about their respective company's plans for the colder months and beyond. While each company declined to speculate, given the current climate, executives for both Home Depot and Lowe's have each this year said that many shoppers now have both the time and energy to embark on do-it-yourself projects for the home, especially with spending on vacations and dining-out curtailed during the coronavirus pandemic.

Edward Jones analyst Brian Yarbrough told Business Insider his "big concern" lies with Lowe's in particular: namely, that the retailer will not be able to go up against its high spikes in comparative sales in 2021. 

"By no means do we think those tailwinds are strong enough that they're going to continue to see the kind of growth they've been seeing since the COVID pandemic started," Yarbrough said. "I think we'll definitely start to taper at some point."

By comparison, Home Depot has seen more steady comp sales results over a longer period.

That being said, he added that "home improvement continues to be strong," thanks in part to the "long-term tailwind" of the aging housing stock.

Bill Darcy, CEO of the National Kitchen & Bath Association, a trade association representing thousands of companies in the kitchen and bath industry, said that while home improvement spending may change after the pandemic abates, he does not believe that it will ultimately shrink. Similar to Yarbrough, Darcy said that home improvement was long slated to explode in 2020, thanks to "sound fundamentals" like an aged housing stock and "pent up demand" among white collar professionals and millennials. 

He added that the COVID-fueled boom of DIY projects could also help fuel home improvement spending on professional contractors, with consumers whetting their appetites for larger post-pandemic remodeling projects.

"I think growth is going to be even stronger coming out of this," Darcy said. "Whether it's now or the future, there is still so much pent up demand still that had not been addressed. We see a lot happening in 2021."

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