Lowe’s sales top Street expectations, boosted by hurricane-related purchases

Lowe’s on Thursday reported third-quarter earnings and sales that outpaced analysts’ expectations, as more shoppers turned up for emergency supplies and repairs following devastating hurricanes and wildfires.

Here’s what Lowe’s reported, compared with what Wall Street was expecting, based on a Thomson Reuters survey of analysts:

  • Earnings of $1.05 a share, excluding items, compared with $1.02 per share.
  • Revenue was $16.77 billion, versus $16.59 billion.
  • Same-store sales climbed 5.7 percent, compared with an anticipated increase of 4.6 percent.

Net income climbed to $872 million, or $1.05 a share, in the fiscal third quarter, from $379 million, or 43 cents, a year earlier. The year-ago period included $462 million of noncash pretax charges.

The home improvement retailer’s sales rose 6.5 percent, to $16.8 billion from $15.7 billion in the period last year. Hurricane-related sales totaled roughly $200 million in the third quarter, Lowe’s said.

Sales at Lowe’s stores open at least a year climbed 5.7 percent, also topping Street expectations.

“Repairs resulting from the hurricanes have blown Lowe’s sales into much firmer growth territory,” GlobalData Retail Managing Director Neil Saunders wrote in a note to clients.

“It is not just natural disasters that are keeping Lowe’s numbers aloft, solid levels of activity in the housing market and a willingness among consumers to invest in the home also continue to drive the DIY market,” Saunders added. “This is benefitting Lowe’s, although not quite as much as it is Home Depot — which remains the destination of choice for many casual improvers and professionals.”

After initially rising following the earnings report, Lowe’s shares were down 2 percent in premarket trade.

Looking to the full year, Lowe’s still expects revenue to increase roughly 5 percent by the end of fiscal 2017, with sales at its established stores rising 3.5 percent. Lowe’s is also on track to have added about 25 home improvement and hardware stores before the year is over.

Lowe’s said Tuesday it bought back $500 million in stock during the third quarter.

“Looking at Lowe’s in isolation, this is a good report today,” Oppenheimer & Co. analyst Brian Nagel told CNBC’s “Squawk Box.”

The one “negative,” according to Nagel, would be rival Home Depotreporting even better same-store sales growth of 7.9 percent last week.

Lowe’s also announced that Chief Operating Officer Rick Damron will retire and be replaced by the president of the company’s international business, Richard Maltsbarger, effective Feb. 3.

In his new role, Maltsbarger will lead Lowe’s push into creating more ways to reach customers whether they are buying online or in stores.

In an attempt to lure younger shoppers, Lowe’s has been experimenting with technology and opened up “smart home centers” at some locations ahead of the holidays.

Earlier this year, Lowe’s rolled out a virtual realty experience that offers do-it-yourself assistance through tutorials inside Lowe’s Holoroom. Then, in September, Lowe’s launched two new augmented reality apps — one for measuring an object, or distance, within the phone’s camera view, and one for viewing images of furnishings, at scale, within a user’s own home.

“We drove traffic in-store and online with compelling messaging,” CEO Robert Niblock said in a statement Tuesday. He added the company continues to invest behind these efforts.

As of Monday’s market close, Lowe’s shares have climbed more than 14 percent in 2017.

This entry was posted in Earnings. Bookmark the permalink.

Leave a Reply