March 21, 2023


Delighting home maniacs

Lowe’s beats sales expectations as home improvement spending surges

Lowe’s beats sales expectations as home improvement spending surges

By Uday Sampath Kumar

(Reuters) – Lowe’s Cos Inc <LOW.N> blew past analysts’ estimates for quarterly sales and profit on Wednesday as it benefited from a surge in demand for paint, tools and barbecue grills from consumers stuck at home due to the COVID-19 pandemic.

The company also posted a 34.2{2bcf6c72702b5c79c6d60e2b201b92505312452d06f0e1ed088ab13b8bc14c0a} rise in quarterly same-store sales, beating analysts’ estimates for a 13.2{2bcf6c72702b5c79c6d60e2b201b92505312452d06f0e1ed088ab13b8bc14c0a} increase, and said the sales momentum was carrying into August, although it would likely taper off in later months.

With a large base of do-it-yourself customers, Lowe’s has been among the chief beneficiaries of people undertaking minor home repair, painting or gardening work during the crisis.

That helped the company’s same-store sales far outpace those of larger rival Home Depot Inc <HD.N>, which relies more on demand from handymen and professional contractors, whose businesses have only recently started to pick up.

Wedbush Securities analysts estimate that nearly 75{2bcf6c72702b5c79c6d60e2b201b92505312452d06f0e1ed088ab13b8bc14c0a} of Lowe’s sales come from DIY customers, compared with about 55{2bcf6c72702b5c79c6d60e2b201b92505312452d06f0e1ed088ab13b8bc14c0a} for Home Depot.

Interactive graphic on same-store sales

“Lowe’s Q2 is one for the record books,” Well Fargo analysts wrote, adding it could still see the benefits of more people moving out to suburban areas – closer to where a majority of its stores are located.

Lowe’s said it expects strong home-improvement demand to continue into the holiday season, but would still likely need to step up promotions from second-quarter levels.

Total second-quarter net sales rose 30.1{2bcf6c72702b5c79c6d60e2b201b92505312452d06f0e1ed088ab13b8bc14c0a} to $27.30 billion, beating expectations of $24.27 billion, according to IBES data from Refinitiv.

Net earnings rose nearly 70{2bcf6c72702b5c79c6d60e2b201b92505312452d06f0e1ed088ab13b8bc14c0a} to $2.83 billion, or $3.74 per share, despite the company spending about $460 million on improving store safety, as well as on additional compensation for employees working during the crisis.

Excluding items, the company earned $3.75 per share, while analysts were expecting a profit of $2.95.

The company’s shares rose 1{2bcf6c72702b5c79c6d60e2b201b92505312452d06f0e1ed088ab13b8bc14c0a} in morning trading.

(Reporting by Uday Sampath in Bengaluru; Editing by Anil D’Silva)