The reason I follow multiple companies within the same industry is, among other things, to cross-check whether trends observed in one company are also evident in another. For example, take a look at the chart below, which illustrates $LOW (Lowe’s) sales per square foot. Focus on the green series—it represents sales adjusted for inflation and square footage growth. The adjustment for square footage growth is less significant now, as Lowe’s (and Home Depot) have largely saturated their markets. The second chart, which shows year-over-year sales per square foot, highlights the extraordinary growth in 2020—nearly 24%.

Now, compare this with what I recently wrote about $HD (Home Depot) (here). In the top chart, you’ll see a similar series for Home Depot’s sales adjusted for inflation and square footage growth (in red). Notice how closely the patterns align between the two companies?

These similarities suggest that both Lowe’s and Home Depot were impacted by the same macroeconomic trends during the pandemic. This indicates that neither company’s management was implementing uniquely effective strategies to drive sales during that period. Instead, the rapid growth was fueled by pandemic-related excesses, which are now tapering off.

Looking ahead, it’s a matter of waiting for the next unusual factor—whether positive or negative—that will influence sales. However, what truly matters when conducting meaningful analysis is finding arguments to support a long-term perspective. In the case of Lowe’s and Home Depot, understanding their market saturation is key. Spectacular growth is likely a thing of the past for both companies.