Lowe's Posts Revenue and Profit Gain -- 2nd Update
March 01 2017 - 1:28PM
Dow Jones News
By Sarah Nassauer and Austen Hufford
The strengthening U.S. economy and housing market boosted Lowe's
Cos. in its latest quarter, as more consumers replaced household
appliances and took on home-improvement projects.
The retailer's sales at stores open at least a year rose 4.2%,
driven by an uptick in categories such as appliances, plumbing,
lumber and lawn and garden.
"They feel it's a good time to invest in their homes again,"
said Chief Executive Robert Niblock in an interview Wednesday. "The
opportunity is there, it just means you need to capitalize on the
opportunity."
Lowe's said it expects the improving economic conditions to spur
sales through 2017, shoring up what had been two weaker previous
quarters for the company. Last November it cut its financial
forecast for the year, citing a slightly slower spending
environment.
Lowe's sales performance fell short of rival Home Depot Inc.,
which reported last week a 5.8% increase at existing stores for the
quarter.
Still, Lowe's shares rose 9.5% in midday trading to $81.44.
The results "provides some comfort that the company is getting
back onto a firmer growth trajectory after a period of relative
softness and widening underperformance compared to Home Depot,"
said Global Data in a research note.
Many retailers are struggling to adapt as consumers increasingly
shift their shopping online and away from physical stores. Target
Corp. on Tuesday warned that its 2017 profit would be as much as
25% lower than Wall Street's forecasts.
Some retailers appear to be thriving, however, including
Wal-Mart Stores Inc., which has invested heavily in its e-commerce
capabilities, as well as Home Depot, which like Lowe's is
benefiting from the resurgent housing market and rising property
values.
Lowe's said the number of customer transactions rose 15% as the
average each customer spent per sale rose 3.6%, mainly driven by
more big-ticket appliance purchases. The company reported positive
comparable sales in 12 of its 13 product categories.
Lowe's quarterly profit was helped by double-digit revenue
gains, though it included about $84 million in severance-related
costs.
So far this year it has laid off around 2,400 assistant store
managers and 525 headquarters staff, Mr. Niblock said. The company
is shifting its labor force to "best support where the consumer is
going in the future," he said.
In all for the quarter, Lowe's earnings rose to $663 million, or
74 cents a share, from $11 million, or 1 cent a share. Revenue rose
19% to $15.78 billion.
For 2017, Lowe's said it expects to add 35 stores, grow
comparable-store sales by 3.5% and post earnings per share of
$4.64. As of Feb. 3, Lowe's operated 2,129 stores, up 15% from last
year, largely from the purchase of Canadian home-improvement chain
Rona Inc.
Write to Sarah Nassauer at sarah.nassauer@wsj.com and Austen
Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
March 01, 2017 13:13 ET (18:13 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Lowes Companies (NYSE:LOW)
Historical Stock Chart
From Mar 2024 to Apr 2024
Lowes Companies (NYSE:LOW)
Historical Stock Chart
From Apr 2023 to Apr 2024