Lowe’s faces a tough task generating growth from its core retail business as consumer spending on home improvement remains subdued.

The retailer’s second-quarter results delivered a mixed picture. Total sales rose 8.3 per cent to $26 billion, marking its fifth consecutive quarter of growth, but comparable sales increased by just 0.2 per cent. As of July 31, Lowe’s operated 1761 stores.

Neil Saunders, MD of GlobalData, said the results were “reasonable” given the tight home improvement market, but noted that growth had “very clearly decelerated from the prior quarter”.

Housing activity improved slightly during the period, and the number of smaller home improvement projects rose 1.5 per cent. However, Saunders said much of that growth was concentrated in repair and maintenance rather than in decorating, refreshes, and other simpler DIY projects, where Lowe’s has traditionally been stronger.

The bigger-ticket end of the market also remained under pressure. According to GlobalData, the number of major home improvement projects declined 2.1 per cent year-on-year as the benefit of tax refunds that had supported spending earlier in the year faded.

Lowe’s has subsequently lowered its full-year expectations, with comparable sales now expected to remain flat. Saunders said the performance suggests the retailer may need to review some of its consumer-focused growth initiatives.

“Despite these unhelpful dynamics, Lowe’s numbers came in well below guidance, which suggests it needs to review some of its growth initiatives in the consumer space,” Saunders said.

Overall sales were helped by the acquisitions of Foundation Building Materials and Artisan Design Group, while the professional segment remains a more resilient source of growth.

“Most of the share gains are coming from the professional segment, which is holding up much better than the consumer DIY space,” Saunders said.

The expansion into professional customers offers significant longer-term potential, but Saunders cautioned that Lowe’s must not lose focus on its core retail business.

“Lowe’s remains a well-run operation,” he said. “There is plenty of longer-term upside here, including from initiatives to recruit younger consumers, drive pro engagement, and become more of a destination for home solutions.”

For now, however, the retailer’s immediate challenge is finding ways to turn those longer-term initiatives into stronger near-term retail growth.

• Further reading: Home Depot’s second-quarter results represent ‘real progress’.