Home Depot, Lowe's Keep Eyes on the Prize

No matter how great your strategic plan or how motivated your employees, there will always be elements of your business you can't control. Bad weather, a flu scare or some other unexpected catastrophe -- like, say, a global financial crisis -- can batter you at any time.

Companies of every size are currently being dragged down by larger market forces. But this week, two of the country's largest retailers showed it's possible to stay hopeful for the future while accepting a less-than-ideal reality. And that's the kind of attitude that keeps a company around for the long haul, whether it's got seven employees or 70,000.

Home Depot(HD Quote) and Lowe's(LOW Quote), the country's largest home-improvement chains, each reported first-quarter earnings this week, reports that were widely anticipated as bellwethers for the larger housing market. If sales of lumber and kitchen cabinets go up, it might signal that Americans are starting to spend again.

Unfortunately, the news wasn't great. Sales were down at both retailers, as were earnings. At Home Depot, sales fell almost 10% from a year earlier, with same-store sales also dropping 10%. At Lowe's, sales dropped 1.5%, with same-store sales declining 6%.

That comparatively lower sales decline from Lowe's was enough to give the market a slight boost. Daniel Binder, managing director at securities firm Jefferies, says Home Depot's comparatively worse performance may be mostly a matter of geography. "Home Depot has more exposure to hard-hit housing states," he says. "Home Depot has 23% of its stores in California, Florida, Arizona and Nevada, while Lowe's has 15%."