Lowe’s, the home improvement giant, recently announced a cut in its full-year forecast due to a decline in quarterly sales and a projected weakening in spending on do-it-yourself projects. The company now expects total sales to range between $82.7 to $83.2 billion for the full year, falling short of its initial expectations of $84 billion to $85 billion. Additionally, comparable sales are anticipated to drop by 3.5% to 4%, compared to the previous forecast of 2% to 3%. Adjusted earnings per share are also expected to be lower, ranging from $11.70 to $11.90 as opposed to the previous outlook of $12 to $12.30. The company attributed these adjustments to “lower-than-expected DIY sales and a pressured macroeconomic environment.”
In the fiscal second quarter, Lowe’s reported earnings per share of $4.10, surpassing the Wall Street expectation of $3.97. However, revenue fell short at $23.59 billion compared to the expected $23.91 billion. Net income for the quarter dropped to $2.38 billion, or $4.17 per share, down from $2.67 billion, or $4.56 per share, in the same period last year. The company received a $43 million pre-tax gain from the sale of its Canadian retail business, boosting earnings per share by 7 cents. Despite this gain, net sales decreased from $24.96 billion in the previous year. The decline in sales marked the sixth consecutive quarter of year-over-year drops for Lowe’s.
Comparable sales, a key industry metric, plummeted by 5.1%, reflecting a decrease in discretionary home projects by customers and lower sales of outdoor and seasonal items due to unfavorable weather. In comparison, Lowe’s competitor, Home Depot, exceeded Wall Street’s expectations for earnings and revenue in its recent quarterly report. Home Depot’s CFO, Richard McPhail, highlighted that customers are delaying projects due to higher interest rates and a heightened sense of economic uncertainty. Despite the fact that many of Home Depot’s customers are homeowners experiencing property value gains, they are still hesitant to invest in home improvement projects.
Lowe’s stock closed at $243.21 on Monday, with a 9% increase so far this year. However, this growth lags behind the almost 18% gains of the S&P 500. The company faces challenges ahead as it anticipates a weaker second half of the year compared to previous expectations. Investors and analysts will be closely monitoring Lowe’s performance in the coming months as the home improvement market continues to evolve.