Online shoppers, contractors and other professionals in the home improvement space drove a strong recovery in the spring for Lowe’s (LOW), propelling the retailer to a better-than-expected performance in the second quarter.
"Our investments in our Total Home strategy continued to drive growth across Pro and online this quarter. And we are excited by our recent launch of same-day delivery nationwide and the expansion of our rural merchandising framework to roughly 300 stores," Lowe’s CEO Marvin R. Ellison said in a statement commenting on the results.
For the quarter ended Aug. 4, Lowe’s reported sales down 0.9% to $24.96 billion and diluted earnings per share down 2.4% to $4.56. Both of these beat analysts’ expectations and were helped by comparable-store sales declining just 1.6% compared with expectations of a 2.6% decline.
Lowe’s said the strong sales growth was partially offset by lumber deflation and lower do-it-yourself discretionary demand.
The company remains “confident in the mid- to long-term outlook for the home improvement industry,” Ellison said.
Strong consumer spending
The company reiterated its full-year outlook for 2023 on the back of the strong performance in the first half. Lowe’s forecast total sales of approximately $87 billion to $89 billion for the full year and adjusted diluted earnings per share of $13.20 to $13.60. It expects full-year comparable-store sales to decline, however, by 2% to 4% compared to the prior year.
Lowe’s declared its quarterly dividend of $1.10 per share last week, which is payable on Nov. 8 to shareholders of record as of Oct. 25.
Home Depot, the world's largest operator in the home improvement sector, told a similar story of strong consumer spending in its second-quarter results posted last week, as Kiplinger previously reported. The company reported better-than-expected earnings of $4.65 per share on $42.9 billion in revenue while reiterating its full-year guidance and announcing a $15 billion stock buyback program.
"While there was strength in categories associated with smaller projects, we did see continued pressure in certain big-ticket, discretionary categories," said Ted Decker, Home Depot CEO, in announcing the results. "We remain very positive on the medium-to-long term outlook for home improvement and our ability to grow share in a large and fragmented market."
