An exterior view of a Lowe’s home improvement store. Lowe’s Companies, Inc. reports quarterly results on Tuesday, May 23, 2023.
Paul Tisserand | Light flare | Getty Images
Lowe’s lowered its full-year sales outlook Tuesday after customers spent less on DIY projects and its third-quarter sales fell nearly 13% year over year.
The home improvement retailer said it now expects sales to total about $86 billion for the fiscal year. He previously expected a range between $87 billion and $89 billion. It expects comparable sales to fall about 5% this fiscal year, worse than the previously forecast decline of between 2% and 4%. The company expects adjusted earnings per share to be around $13, lower than the previously forecast range of $13.20 to $13.60.
In a press release, CEO Marvin Ellison said the company had experienced “greater pushback than expected” from customers on discretionary projects and large purchases. It nevertheless clarified that its sales to home professionals, which represent a growing share of its turnover, increased during the quarter. These professionals generate around 25% of its activity.
He said the business, which sells Christmas trees and decorations, will then focus on “delivering value and convenience this holiday season”.
Here’s how the company performed for the fiscal third quarter ended November 3:
- Earnings per share: $3.06 It was not immediately clear whether it compared to the $3.03 analysts expected, according to consensus estimates from LSEG, formerly known as Refinitiv.
- Revenue: $20.47 billion versus $20.89 billion expected
Lowe’s, like its larger rival Home Depot, faces slowing demand as Americans’ huge pandemic-fueled appetite for home improvement moderates and higher mortgage rates inject more uncertainty in the real estate market.
Ellison warned during an earnings conference call in August that lower spending on DIY projects would be “the overall theme of how we look at the second half.” But he stressed that in the long term, the home improvement market has bright prospects due to limited housing stock and the higher average age of housing in the United States.
Lowe’s third-quarter net income was $1.77 billion, or $3.06 per share, compared with $154 million, or 25 cents per share, a year earlier. This quarter included a $2.1 billion impairment charge as the company exited the Canadian market.
Net sales fell from $23.48 billion a year earlier.
Lowe’s competitor Home Depot beat Wall Street’s third-quarter earnings and revenue forecasts last week, even though its sales fell 3% year over year. Home Depot said customers are still repairing their homes, but have noticed in recent quarters that more of them are taking on smaller, less expensive projects.
Home Depot Chief Financial Officer Richard McPhail also said that “the worst of the inflationary environment is behind us.”
Lowe’s shares have risen about 3% so far this year, but have lagged the S&P 500’s gains of about 18%. The company’s stock closed Monday at $204.44, bringing the market value of the company at almost $118 billion.
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