What's going on?

One-time American sweetheart Lowe�s reported worse-than-expected quarterly earnings on Wednesday, and investors ditched the home improvement retailer�s shares.

What does this mean?

Sure, Lowe�s sales were better than analysts expected, thanks to twice as many online sales as the same time last year. But its profits � weighed down by store refurbishments and ecommerce investments � weren�t able to live up to estimates. Workforce expenses were a biggy too: Lowe�s has been paying its staff higher wages during the pandemic, and the move’s cost it $1 billion in the first nine months of the year. Still, at least that’s not Home Depot money: Lowe�s DIY rival reported costs closer to $2 billion on Tuesday.

Why should I care?

For markets: Home isn�t necessarily where the heart is.�

Lowe�s shares took off after the coronavirus outbreak. That�s mostly because its status as an �essential retailer� allowed the company to keep its doors open during lockdown, and because it hoovered up cash that would�ve been for holidays instead of home improvements. But with its sales growth slipping from summer peaks, the question for investors now is just how sustainable those gains will be. Maybe Lowe�s ought to follow Target�s example: the discount retailer reported an increase in its market share on Wednesday, which should set it up for success when the pandemic�s behind us.

The bigger picture: Tough lux.�

Shopping habits are changing left, right, and center, but one of the most notable shifts is in luxury spending. China�s now set to become the biggest luxury market by 2025 according to consultancy Bain, with the country�s wealthiest traveling less and splurging more on home turf (tweet this). At least that gives luxury retailers something to look forward to after a terrible 2020: this year won�t just see the sector�s first drop in sales since 2009, it�ll see the biggest drop in sales ever � and things aren�t expected to get back to pre-pandemic levels till 2023.