Profits at Lowe’s, one of the two major home repair suppliers, fell by 44% in the third quarter.
Lowe’s sells to customers who are improving their lifestyle by upgrading their homes. This is necessary when selling a home. But homes are still not selling. Owners are out of money to make repairs. They sense that repairs will not help them sell their homes; only large price reductions will. So, they hold on.
This is not the first year of the decline in housing prices. It is year four. Lowe’s got hit this hard in year four. This indicates that the housing market is nowhere near recovery.
Housing is in the tank. It is a major employer. The construction industry is still in recession mode. The failure of Lowe’s shows just how bad this market is.
Lowe’s did sell to customers making purchases of under $500. But large-purchase buying fell. This is where the big profits are for Lowe’s.
The company will close 20 stores and fire almost 2,000 people.