Lowe’s reported fiscal second-quarter earnings that beat expectations but missed on sales. The company cut its full-year outlook, citing lower-than-expected DIY sales and a pressured macroeconomic environment as key factors. CEO Marvin Ellison highlighted consumer hesitancy stemming from high inflation and the expectation of future interest rate cuts by the Federal Reserve.
“Inflation remains high, and big-ticket purchases are being delayed as customers sit back and wait for interest rates to fall,” said Ellison. About 90% of Lowe’s customers are homeowners with a fixed 30-year mortgage rate of less than 4%. This makes them reluctant to take out new loans for major home projects given the current interest rate environment.
For the fiscal second quarter, Lowe’s reported earnings per share of $4.10 adjusted versus the $3.97 expected by analysts. The company’s revenue was $23.59 billion, falling short of the expected $23.91 billion.
Lowe’s adjusts full-year sales forecast
Net income for the period that ended August 2 dropped to $2.38 billion, or $4.17 per share, from $2.67 billion, or $4.56 per share, in the prior year. The company’s earnings were bolstered by a $43 million pretax gain from the sale of its Canadian retail business in 2022. Despite these gains, net sales declined from $24.96 billion in the previous year, marking the sixth consecutive quarter of year-over-year sales decreases.
Comparable sales dropped 5.1% due to fewer discretionary home projects and unfavorable weather affecting sales of outdoor and seasonal items. Lowe’s now expects total sales of between $82.7 billion and $83.2 billion for the full year, down from the previously expected $84 billion to $85 billion. Comparable sales are expected to fall by 3.5% to 4%, compared with an earlier forecast of a decline of 2% to 3%.
Shares of Lowe’s closed Monday at $243.21. The company’s stock is up about 9% year-to-date, trailing behind the nearly 18% gains of the S&P 500.
