Lowe’s followed Home Depot with stronger-than-expected third quarter earnings powered by home improvement demand in a weakening housing market.
Lowe’s Companies (LOW) – Get Free Report posted stronger-than-expected third quarter earnings Wednesday, while boosting its full-year profit forecast, as home improvement demand continues to drive the bottom line of the country’s biggest retailers.
Lowe’s said adjusted earnings for the three months ending on October 28 were pegged at $3.27 per share, a 13.5% increase from the same period last year and firmly ahead of the Street consensus forecast of $3.10 per share.
Group revenues, Lowe’s said, rose 2.5% to $23.5 billion, narrowly topping analysts’ estimates of a $23.1 billion tally. U.S. same-store sales rose 3%, compared to the Refinitiv forecast of a modest 0.8% gain.
Looking into the 2023 financial year, which ends in January, Lowe’s said it sees revenues in the region of $97 billion and $98 billion, with same-store sales either flat or falling by 1% from 2021 levels. Earnings are expected to come in between $13.65 to $13.80 per share, up from its prior forecast of $13.10 and $13.60 per share.
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“We delivered better-than-expected results this quarter, with U.S. comps up 3%, driven by Pro growth of 19% and improved DIY sales trends. Sales on Lowes.com grew 12%, on top of 25% growth last year. We also drove substantial improvement in adjusted operating margin through disciplined execution and cost management,” said CEO Marvin Ellison. “This enabled us to award $200 million in bonuses to our front-line hourly associates, while also announcing $170 million in permanent wage increases.”
“I am pleased that we are once again able to share the success of the company with our hard-working front-line associates, and I look forward to discussing our next chapter of growth at our Analyst & Investor Conference in December,” he added.
Lowe’s shares were marked 0.4% lower in pre-market trading immediately following the earnings release to indicate an opening bell price of $208.00 each.
Earlier this week, Home Depot HD posted better-than-expected third quarter earnings, and repeated its full-year profit forecast, as the home retailer capitalized on a new wave of remodeling projects, as well as higher prices, amid a broader decline in the U.S. housing market.
Looking into the 2022 fiscal year, which ends next January, Home Depot reiterated that it sees ‘mid single digit’ earnings growth, up from its prior forecast of ‘low single digit’ gains, and comparable sales growth of around 3% and operating margins of around 15.4% Comparable sales are expected to be positive over the final quarter, Home Depot said.
