Lowe’s reported their Q2 earnings this week and much of it was the same trends that they’ve been experiencing. One takeaway that got quite a bit of focus though is they saw some increased competition in seasonal categories, including grills.

As I said in the prepared comments, we observed some heightened competitive pressures, primarily in July. We had competitors being aggressive on price, primarily seasonal categories. So think about grills, patio, and live goods that probably drove unit and sales performance for them but obviously was not very profitable. So if you look at our July results, you can see that as an impact. Having said that, our goal is to be very transparent on what we’re seeing in the competitive marketplace, but also to be very clear on the initiatives we’re working on and how we’re trying to drive the business, not only in the second quarter, but in the second half of the year.

Marvin Ellison, President and CEO of Lowe’s

They attributed the loss of share to a temporary market dynamic where competitors where leaning more heavily into promotion and offsetting the decreased margin with tariff refund dollars. It’s a plausible explanation as we’ve seen companies at all levels of the supply chain effectively making their margin look better.

I think the most transparent way to answer this is what I said earlier. We think it’s transitory. We believe we had
competitors, plural, that received tariff refunds and decided to take pricing action to either A, drive units and B, to clear out seasonal inventory. And that’s what we saw. So that’s just giving you a view of the competitive landscape.

We did not choose to match some of those promotions because they were not in our financial plan, nor did we think it was financially prudent to match them. It’s pretty easy to determine who did what, just look at their tariff refunds versus their gross margin versus last year. And you can determine pretty much who did what.

So for us, we’re extremely pleased that we’re going to remain disciplined. That’s why we are happy with the fact that we dealt with lots of cost pressures like everyone is dealing with. But we were able to leverage our PPI initiatives to ensure that we were able to take the right
plan steps to drive profitability, to create really good flow-through.

Now, we’re going to be competitive, but we’re going to be rational with our competitiveness. And again, we think this is transitory. We don’t
see this happening in the second half of the year because we don’t see additional tariff refunds coming to competitors in the second half
of the year that’s going to give them the ability to be this aggressive on price. It was a moment in time, it impacted July, and we’re just being
transparent with what we saw in the competitive landscape.

Marvin Ellison, President and CEO of Lowe’s

Using the tariff refunds as a tool to hit margin targets while also selling through grills in a down year is a good way to put those dollars to work. It could be even more so this year with the grill retail landscape changing next year. Lowe’s will start selling Traeger and Home Depot will start selling Pit Boss.

We’ll see how Home Depot and Lowe’s merchandise their new brands, but it’s possible that Home Depot features Traeger and other brands less prominently. With that, they may need to sell down their inventory for the load in of Pit Boss grills.

A good way to sell down the inventory to change the brand mix would be promotions covered off by tariff refunds. That could show up in Traeger’s Q3 earnings if they have lower sell through with expected levels of POS sales.