Covid Lifestyle Shift Keeps Pool Demand Afloat
Opinion
Brooke Sutherland
Pools and tools were hot sellers at the peak of Covid-19 as forced time at home made many people want to upgrade their living space. Some 18 months into the pandemic, case counts are trending down in the US; restaurants, movie theaters and concert venues are open again; and demand for domestic leisure travel has surpassed 2019 levels at times. But consumers just keep spending on their homes. Pentair Plc, a maker of pool pumps, lights and filters, this week reported a 32% jump in sales for that part of its business in the third quarter. The robust growth is on top of a tough comparison to the period a year ago, when pool-related revenue surged a whopping 50%. Pool manufacturers typically run early order promotions during the off-peak winter months to try to keep factories busy, but Pentair already has more demand than it can handle because, like most manufacturers, it’s battling supply-chain snarls. There’s little need to drum up extra sales with discounts this year. Dealers of Pentair equipment are booked well into the third quarter of next year, and homebuilders have backlogs of pool projects that stretch into the latter half of 2022 as well. Asked on a call with Wall Street analysts whether there was anything that might prevent the pool business from growing next year, Pentair Chief Executive Officer John Stauch had a succinct answer: “No.” It was a similar story at Hayward Holdings Inc., which makes pumps, cleaners and automation equipment. Sales jumped 56% in the third quarter, and Hayward this week raised its guidance for the full year to as much as 62% growth. The company projected overall demand for pool construction in the US would be at or above the 35-year median through the next few years and bounce back by 2025 to a level not seen since the housing glut that fueled the 2008 financial crisis. Hayward CEO Kevin Holleran pointed to a shift in preference toward suburban areas, particularly the pool-rich Sun Belt region, and a need to upgrade existing pools in the US, where the average age is now more than 22 years. When consumers build or renovate pools, they also increasingly want them to be digitally connected and operating on a saltwater system. That translates to more dollars and recurring demand. It’s not just pools: Organic sales of Stanley Black & Decker Inc.’s tools and storage products were up more than 25% in the third quarter relative to pre-pandemic levels as consumers continue to invest in home renovations. CEO Jim Loree called it “the strongest demand environment in our history.” The company has $200 million of innovation and growth investment projects in process to help keep it that way, including an expansion of its lineup of electric and autonomous lawn equipment. Air conditioners had a moment during the pandemic as the airborne nature of Covid reinforced the importance of good filtration and ventilation. That trend is showing no signs of abating. Global warming is also aging equipment faster as consumers crank up the AC, and an Environmental Protection Agency ban on sales of an ozone-depleting refrigerant will force many homeowners to replace their systems. Barclays Plc analyst Julian Mitchell estimates residential HVAC sales at Lennox International Inc. are on track to top 2019 levels by 24% next year. Credit-card data tracked by Bank of America Corp. shows that spending at home-improvement stores has actually picked up in recent weeks and is trending about 35% above 2019 levels, despite a recovery in airline bookings and entertainment purchases as the effects of the delta variant fade. “This suggests that the reengagement of leisure services did not come at the expense of goods,” BofA’s US economists Michelle Meyer and Anna Zhou wrote in a report this week. What’s most interesting about this continued boom in home improvement spending is that it’s happening even as these companies push through multiple rounds of price increases to offset rising commodity and logistics costs. Pools in particular are the peak of discretionary purchases: They are large investments that take multiple quarters to complete. So if consumers are still splashing out, they must be feeling pretty good about their finances and fairly confident that their future lifestyles will entail a good amount of time in their backyards. Sales growth isn’t always going to be this gangbusters. But fears that residential spending would fall off a cliff in the back half of 2021 as habits normalized are proving to be unfounded. Bloomberg
from Asharq AL-awsat https://english.aawsat.com/home/article/3278236/brooke-sutherland/covid-lifestyle-shift-keeps-pool-demand-afloat
No comments:
Post a Comment