Lowe’s reports mixed second-quarter results, citing shortened spring that hurt sales

Lowe’s on Wednesday reported second-quarter earnings that beat analysts’ expectations as the company said improved operations offset lower-than-expected sales that were hurt by a shortened spring.

The home improvement retailer said sales to do-it-yourself customers were also hurt by lower demand for certain discretionary items. That was partially offset by an increase in sales to professionals such as contractors and electricians.

Comparable sales fell 0.3% overall, though home improvement in the U.S. saw a slight growth of 0.2% versus the same quarter last year.

“I am pleased that our team drove operating margin improvement and effectively managed inventory despite lower-than-expected sales – a clear reflection of our relentless focus on operating discipline and productivity,” Lowe’s CEO Marvin R. Ellison said in a release.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

• Earnings per share: $4.67 cents, adjusted, vs. $4.58 expected
• Revenue: $27.48 billion vs. $28.12 billion expected

Lowe’s said it now expects total and comparable sales for the year toward the bottom of its outlook range. It had forecast sales of $97 to $99 billion and comparable sales to be down 1% to up 1%. Operating income and earnings are expected to be toward the top end of its previous forecast.

Shares of the company were up around 3% in pre-market trading.

For the three month period ended July 29, Lowe’s reported a net income of $2.99 billion, down from $3.02 billion last year. Net sales slipped to $27.48 billion, from $27.57 billion a year ago.

The results come after Home Depot on Tuesday reported better-than-expected earnings and revenue for the second quarter, and stood by its forecast. Many people took up home improvement projects as they hunkered down during the pandemic, and investors have been watching to see whether that spending is holding up

Lowe’s has a different customer mix than Home Depot, which tends to get more of its sales from home professionals. Lowe relies more heavily on do-it-yourself customers, which makes it more vulnerable to shifts in demand.

“Our results in the first half were disproportionately impacted by our 75% DIY customer mix, which was partially offset by our double-digit Pro growth for the ninth consecutive quarter,” Ellison said in a statement.

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