Retailers, service companies gain as recession causes people to stay home

CINCINNATI -- As Americans grow accustomed during the recession to spending more time at home and living in the same places longer, home-improvement companies are regaining momentum.

"My wife and I had thought of this as more of an in-between house," said Scott Nichols, 50, who had considered moving from his suburban Cincinnati home to a condo or ranch-style house. "Now we have decided to concentrate on making our current home exactly like we want it, pay it off and stay."

An insurance marketer who lives in Union Township, Ohio, Nichols hired a handyman service to knock out a wall between his kitchen and family room to make home entertaining easier.

Though construction and major remodeling remain sluggish -- walloped by the housing market's plunge -- demand has risen at big-box home-improvement stores for items to make small repairs and maintain lawns and gardens. Analysts say Home Depot Inc. and Lowe's Cos. Inc. are likely to show the benefits when they report their first-quarter earnings this week.

Handyman, painting and floor covering businesses also say they're booking more small jobs in recent months. Nichols' contractor said his project was part of a trend.

"We started to pick up a few weeks ago," said Dan Landon, owner of the Milford-based House Doctors franchise. "And then it was like someone flipped a switch and I'm booked solid."

Landon said his employees have been doing mostly general repairs like fixing doors, windows and decks and refreshing bathrooms and other areas. Jim Hunter, president and chief executive officer of House Doctor's parent company, H.D. Franchising Systems LLC in Milford, said revenue has risen this year compared with last year at more than half its franchises around the country.

"The market is still struggling with big home additions, but the soft economy is keeping us busy with homeowners just fixing things up for now," Hunter said.

Some consumers are tackling the smaller projects themselves rather than hiring professionals, repairing instead of replacing items and doing more comparison pricing, retailers and service companies said.

"Whether it's good times or bad, homeowners are going to preserve their investment," said Karen Cobb, spokeswoman for Mooresville, N.C.-based Lowe's. "When people stay at home more and are less quick to move, they are more likely to notice things like the coat of paint that needs refreshing or a dripping sink."

Stifel Nicolaus & Co. analyst David Schick wrote in a note to investors that he believes Lowe's sales were "relatively healthier" during the first quarter thanks to an increase in garden sales and smaller do-it-yourself jobs.

Citi Investment Research analyst Deborah Weinswig predicted in a note to investors that Home Depot's sales are trending better than management's guidance.

Home Depot spokeswoman Kathryn Gallagher said the Atlanta-based retailer is seeing a surge in spending on projects like fixing a leaky toilet, updating a look and just enhancing the feel and value of homes.

At the Home Depot store in the Salt Lake City suburb of Sandy, Utah, assistant manager Kristin Calderwood said shoppers are buying -- just more conservatively.

"They still need to refresh kitchens if they are falling apart, but they are going down a level or two from the more expensive countertops," Calderwood said. "Customers aren't going as much toward the high end."

Peter's True Value Hardware in Milford, Mich., where auto industry layoffs have pushed up unemployment, also has been selling more items for enjoying life at home, like backyard barbecue grills. Owner Peter Grebeck said those sales usually don't pick up until June or July.

And at Home Depot's Crescent Springs store in northern Kentucky, shopper Christian Mains, 24, of Dayton, Ky., who said he had to delay buying a new house, is focusing his spending on his current home instead.

"I'm just trying to maintain and keep up what I have until things get better," Mains said.