BOSTON (TheStreet) -- Home Depot (HD) - Get Home Depot, Inc. Report and Lowe's (LOW) - Get Lowe's Companies, Inc. Report patio furniture and grills can't match the revenue of truckloads of lumber and piping, but they're a solid foundation as home improvement retailers rebuild their buyer base this season.
grills stood in rows at the front of a
in Boston earlier this week, while
lawn and garden products and
Black & Decker
mowers filled the shelves of seasonal aisles -- reminders of the customer service and "lower-price campaign" strategies that Chief Executive Frank Blake credited with keeping the company above water for the last two years. Beyond the room-sized displays of patio furniture, fire pits and Black Friday-style outdoor product promotions, contractors were loading up on building supplies. Home Depot and its competitors are expecting more of them in 2010.
Despite 2009 sales that fell 7.2% from the year before and last year's closure of its EXPO Design Center chain, Home Depot expects 2.5% sales growth this year. Lowe's, meanwhile, envisions 4% to 6% total sales growth and 40 to 45 new stores in 2010.
That optimism reflects improved consumer sentiment.
Spending and Saving Tracker found that 85% of homeowners considered their home their most valuable investment and planned to spend an average of $6,200 on home improvement projects this year. Those projects will be more modest than, perhaps, a new deck or an addition, but 47% of those people will be hiring contractors to complete the work.
"We were pleased that the majority of people were planning to do projects and spend a significant amount with the money they had in hand instead of borrowing," says American Express spokeswoman Mona Hamouly. "We saw it as a signal that people are interested in these projects, but still want to manage their finances in a prudent way."
Home Depot, Lowe's and Midwest mega-retailer Menards declined to comment, but each has reason to cheer spring's arrival. The Commerce Department reported a 27% spike in new-home sales last month, while the U.S. Census Bureau reported more than 3% (or more than $125 million) growth in building material and garden equipment sales last month compared to March 2009. Earlier this month, Harvard University's Joint Center for Housing Studies said the amount spent on home improvements could surpass $121.5 billion by the fourth quarter, increasing sales nearly 5% from 2009 and spurring the first annual increase in home remodeling spending since 2006.
"With house prices showing modest gains in most markets and the employment outlook beginning to stabilize, owners are likely to refocus attention on home improvements," says Kermit Baker, director of the Harvard group's remodeling futures program, in a statement. "Home sales are trending up, which shows growing confidence in the housing market."
Despite the sunnier outlook, there's still enough pessimism in the air to prevent a permanent shift from smokers and sod to sheetrock. Though American Express' survey found that 62% of homeowners will renovate this year to improve their home's appearance and value, 53% of all homeowners feel a seller's market is still about two years away. With roughly 52% bullish on getting their asking price, there's a chance that the improvements spurring 2010's spending uptick will be more cosmetic than constructive.
"In the past, people have focused on these projects to increase the value of their home and quickly sell," American Express' Hamouly says. "Even though the majority of the people believe it will years before it's a seller's market again, they're still interested in improvements just because they care about the appearance of their home while they're living in it."
-- Reported by Jason Notte in Boston.
Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, The Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.