Lowe’s Earnings (Lower) Q2 2024

Louie It lowered its full-year outlook on Tuesday as quarterly sales at home improvement retailers fell and said it expected spending on do-it-yourself projects to weaken.

The company said it now expects total sales to be between $82.7 billion and $83.2 billion for the full year, compared with $84 billion to $85 billion it previously forecast. It said it expects comparable sales to decline 3.5% to 4%, compared with its previous forecast of a decline of 2% to 3%. It expects adjusted earnings per share to be between $11.70 and $11.90, compared with its previous forecast of $12 to $12.30.

Lowe’s cited “lower-than-expected DIY sales and a stressed macroeconomic environment” in a press release.

Here’s what the company reported for its fiscal second quarter compared to what Wall Street was expecting, based on a survey of analysts conducted by LSEG:

• Earnings per share: $4.10 vs $4.10 expected $3.97
• profit: $23.59 billion vs. $23.59 billion expected $23.91 billion

In the three-month period ended August 2, Lowe’s net income fell to $2.38 billion, Or $4.17 per share, compared to $2.67 billion, or $4.56 per share, in the year-ago period.

Lowe’s took a $43 million pretax gain from the sale of its Canadian retail business in 2022, boosting its second-quarter earnings. That boosted the company’s earnings per share in the period by 7 cents. Excluding the gains, the company earned $4.10 per share.

Net sales were down from $24.96 billion a year earlier. Lowe’s posted its sixth straight quarter of year-over-year sales decline.

Comparable sales, an industry measure that takes into account one-time factors such as store openings and closings, fell 5.1% as the company said customers did fewer discretionary home projects and unfavorable weather hurt sales of outdoor and seasonal items. It said those declines were partially offset by growth in its online business and sales to home professionals, such as contractors and electricians.

Lowe’s shared its quarterly results and outlook at a time when investors and economists are closely watching consumer spending. Recent economic data and corporate earnings have given mixed signals about the financial health of American households, as the Federal Reserve considers a long-awaited interest rate cut.

Job growth in July was much lower than expected. On the other hand, WalmartThe largest U.S. retailer “does not see any further deterioration in consumer health,” Chief Financial Officer John David Rainey told CNBC. Goldman Sachs also cut its recession probability to 20%.

For home improvement retailers, the pressure may be greater due to higher mortgage rates and higher borrowing costs. Lowe’s competitor Home DepotLast week, it beat Wall Street’s quarterly earnings and revenue expectations. However, the company said it expects the second half of the year to be weaker than expected as consumers continue to adopt a “postponement mentality.”

In an interview with CNBC, Home Depot CFO Richard McPhail said customers aren’t just putting off projects because of higher interest rates, they also have a “greater sense of uncertainty in the economy,” even though most Home Depot customers own homes and are seeing sharp gains in property values.

Lowe’s shares closed Monday at $243.21. As of Monday’s close, the company’s stock was up about 9%, lagging the S&P 500’s gain of about 18%.

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