An exterior view of a Lowe’s home improvement store. Lowe’s Companies, Inc. reports quarterly earnings on Tuesday, May 23, 2023.
Paul Weaver | Lightrocket | Getty Images
In a recent announcement, Lowe’s revealed that its full-year sales outlook has been reduced, citing decreased spending by customers on do-it-yourself projects. Its fiscal third-quarter sales plunged almost 13% year over year.
Lowe’s now forecasts sales of approximately $86 billion for the fiscal year, down from the previous estimate of $87 billion to $89 billion. It expects comparable sales to decline by about 5%, worse than the previously anticipated range of 2% to 4%. Adjusted earnings per share are projected to be around $13, lower than the initial range of $13.20 to $13.60.
Lowe’s CEO Marvin Ellison acknowledged a greater-than-expected decline in customers’ discretionary projects and big-ticket purchases. Despite this, sales to home professionals, which contribute significantly to its revenue, increased in the quarter. These professionals constitute about 25% of its business.
As the company faces a sales challenge in the fiscal third quarter that ended Nov. 3, it is strategically planning for the holiday season, with emphasis on offering value and convenience to customers.
Performance for the fiscal third quarter includes:
- Earnings per share: $3.06, slightly above the consensus estimate of $3.03 from LSEG
- Revenue: $20.47 billion, missing the $20.89 billion expected
Continuing to comment, Lowe’s CEO emphasizes the challenge of cooling demand but points to optimistic prospects for the home improvement market, considering the limited housing stock and the aging home inventory across the U.S.
For the third quarter, Lowe’s net income was $1.77 billion, or $3.06 per share, compared with $154 million, or 25 cents per share, in the year-ago period, which included a $2.1 billion impairment charge from exiting the Canadian market.
Net sales fell from $23.48 billion a year earlier.
Competing with Home Depot, Lowe’s is cautiously navigating through a changing homeowner landscape as customers’ appetite for home improvement diminishes, and higher mortgage rates introduce more uncertainty into the housing market.
Lowe’s shares have seen a 3% increase year to date, falling short of the approximately 18% gains of the S&P 500. The company’s stock closed at $204.44 on Monday, bringing its market value to nearly $118 billion.