Lowe’s delivered stronger than expected quarterly revenue and earnings, even as higher mortgage rates and softer housing activity continued to weigh on the home improvement sector.
The retailer reported more than 10% year-over-year sales growth for its fiscal fourth quarter and raised expectations for annual revenue growth.
However, its full-year earnings per share guidance came in below Wall Street forecasts, sending shares lower in premarket trading.
The results highlight a mixed backdrop for US home improvement retailers, where steady demand from professionals is helping offset cautious spending by homeowners delaying larger renovation projects.
Quarterly beat
For the three months ended Jan 30, Lowe’s reported adjusted earnings per share of $1.98, ahead of analysts’ expectations of $1.94, according to LSEG.
Revenue came in at $20.58 billion, topping the $20.34 billion forecast.
Net income declined to $999 million, or $1.78 per share, from $1.13 billion, or $1.99 per share, a year earlier.
Revenue rose from $18.55 billion in the prior year period.
Comparable sales increased 1.3% during the quarter, exceeding StreetAccount expectations of 0.2%.
The company said growth was supported by gains among home professionals, online sales, home services, and a solid holiday season.
Full year guidance
Lowe’s expects total sales for the current fiscal year to range between $92 billion and $94 billion, representing growth of roughly 7% to 9% compared with the prior year.
The company projected adjusted earnings per share between $12.25 and $12.75. Analysts had expected $12.95, according to LSEG.
Comparable sales are forecast to be approximately flat to up 2% for the full year.
Chief executive Marvin Ellison said the retailer is focusing on productivity initiatives and executing on areas within its control, as the broader housing environment remains pressured.
He said the company’s strategy is resonating with both do-it-yourself customers and professional contractors.
Industry backdrop
The results came a day after Home Depot also beat Wall Street’s earnings and revenue expectations while maintaining cautious full-year guidance.
Demand for home improvement remains subdued, as US consumers continue to delay major renovation projects amid high borrowing costs, elevated housing prices, and economic uncertainty.
Both Lowe’s and Home Depot have leaned further into serving contractors and other professionals, who tend to generate more consistent demand than individual homeowners.
Last year, Lowe’s acquired Foundation Building Materials for about $8.8 billion, adding a distributor of drywall, insulation, and other interior products for large residential and commercial professionals.
It also purchased Artisan Design Group for roughly $1.33 billion, expanding into design services and installation of flooring, cabinets, and countertops for homebuilders and property managers.
Beyond acquisitions, Lowe’s launched a third party marketplace, worked with influencers, and relaunched its kids’ programme to reach younger families delaying home purchases.
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