LOW Lowes Companies Inc

By Kimberly Chin 

Lowe's Cos. reported higher earnings in its latest quarter that topped expectations, in a sign the company's aggressive cost-cutting strategy could be paying off.

The home-improvement retailer's earnings rose 10% in the second quarter to $1.68 billion, or $2.14 a share. Analysts forecast earnings of $2.03 a share, according to FactSet.

Shares of Lowe's climbed 12% in premarket trading.

The company took a $14 million pretax loss related to the wind down of its Mexico retail operations. Excluding special items, Lowe's said earnings were $2.15 a share, also ahead of analysts' estimates.

The profit increase was largely due to a drop in expenses, which fell 7.7% in the quarter.

Earlier this month, Lowe's said it would lay off thousands of store workers as the company moves to outsourcing tasks such as assembling barbecue grills and janitorial services. Lowe's employed 190,000 full-time and 110,000 part-time workers as of Feb. 1.

Since Chief Executive Marvin Ellison took the helm last summer, he has called for vast improvements in the company's inventory, customer service and work processes. The company is now stocking more faster-selling items while reducing inventory of lower-performing ones.

In recent years, Lowe's sales growth has lagged behind rival Home Depot Inc. During the first quarter, Lowe's sales growth outpaced Home Depot for the first time since 2016. In the latest quarter, Lowe's said same-store sales in the U.S. rose 3.2%, ahead of Home Depot, which reported U.S. same-store sales growth of 3.1%.

Overall same-store sales at Lowe's rose 2.3%, while Home Depot's same-store sales were up 3%.

Net sales rose 0.5% to $20.99 billion from a year ago. Analysts projected revenue of $20.93 billion.

Write to Kimberly Chin at kimberly.chin@wsj.com

(END) Dow Jones Newswires

August 21, 2019 08:43 ET (12:43 GMT)

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