‘Cash for Appliances,’ Housing Recovery Should Help Home Improvement Spring Sales

by Doug Desjardins

With the rate of new home construction and home sales still crawling along, home-improvement retailers are bracing for another slow sales season this spring. But a new federal program coupled with increasing signs of a recovery should drive more customers into stores. paint-cans-and-brushes

Home improvement giants like Home Depot and Lowe's always roll out spring seasonal sections for homeowners looking to improve their outdoor living areas. And this year, a new "Cash for Appliances" program being funded by federal stimulus money is expected to help drive appliance sales, a high-end category that's been hard-hit by the recession.

The program started this month in a few states and will roll out to most states in March and April. It allows consumers to trade in old appliance like refrigerators, dishwashers and air conditioners for rebates toward new, energy-efficient models, and is modeled after the "Cash for Clunkers" initiative that boosted new-car sales in 2009. The $300-million program administered by the Department of Energy varies from state to state, with rebates ranging from $50 to $300 depending on the price and type of appliance.

"Our goal is to encourage consumers to transition to Energy Star appliances that will save both money and the environment in the long term," said Jen Stutsman, a spokeswoman for the Department of Energy.

Retailers are putting the promotion to good use. Sears and Lowe's are promoting free 'Haul-Away' programs that pick up old appliances, take them to be recycled and mail a document back to buyers proving that the clunker appliance was disposed of properly. And Home Depot, Sears and other appliance retailers are putting Energy Star appliances - those that meet government standards for energy efficiency - on sale to provide even more incentive for would-be buyers.

The timing of the promotion gives home-improvement retailers a chance to launch a two-pronged sales effort this spring, combining appliance sales with traditional spring items like outdoor living décor and lawn and garden supplies. Home Depot, which picked up Martha Stewart as a new promotional partner late last year, will roll out its first "Martha Stewart Living" line of house and garden products this March in conjunction with its annual spring sale.

Spring sales at home improvement retailers are likely to focus on affordable, low-cost items for do-it-yourselfers, continuing a practice both chains adopted two years ago when the housing market went bust. In recent months, Lowe's reported positive sales trends in flooring and home appliances, a sign that homeowners are starting to loosen their purse strings. Home Depot also reported improved sales of similar items in California and Florida, the two states first hit by the housing crisis and the first likely to recover.

Both Home Depot and Lowe's are expecting to report only mediocre results for their most recent quarter. Lowe's is expected to report a 9-percent increase in earnings while analysts are projecting a 15 percent decline for Home Depot.

Resources

Energysavers.gov offers cash for more efficient appliances

Lowe's Cash for Appliances Program

Earnings Preview: Home Depot, Lowe's Look for Housing Comeback

U.S. Home Construction Rose 2.8% in January