By Savyata Mishra
(Reuters) – Home improvement retailer Lowe’s Cos on Tuesday forecast a slower-than-expected decline in annual comparable sales, banking on a boost to current quarter sales from hurricane-related demand, although big-ticket spending remains under pressure stood.
The company also beat third-quarter comparable sales and profit expectations, similar to results from larger rival Home Depot, which last week cited higher demand for building materials and paint amid hurricane reconstruction.
Hurricanes Helene and Milton devastated parts of the United States, including Florida and North Carolina, causing extensive damage to homes, bridges, energy infrastructure and crops.
“Our results this quarter were modestly better than expected, even excluding storm-related activities, thanks to positive top-line numbers in Pro, strong online sales and smaller-ticket DIY projects,” said Lowe’s CEO Marvin Ellison.
Lowe’s, which generates roughly 75% of its sales from the DIY category, has seen challenging demand as interest rates have risen in recent years, making projects that require refinancing less attractive.
Meanwhile, the segment targeting builders and contractors, a more professional customer base, saw relative strength thanks to storm recovery efforts in the quarter.
“We think it’s too early to call a turning point in underlying home improvement demand,” said portfolio manager David Wagner at Aptus Capital Advisors, which owns Lowe’s ETFs.
Lowe’s slightly lowered its annual adjusted margin guidance to a range of 12.3% to 12.4%, compared to a previous range of 12.4% to 12.5%. The company’s shares were down about 2.5% before the bell.
It reported a 1.1% decline in same-store sales for the quarter ended Nov. 1, better than the average analyst estimate of a 2.86% decline, according to data compiled by LSEG.
The company earned $2.89 per share on an adjusted basis, beating an estimate of $2.82 per share.
Lowe’s expects same-store sales to decline between 3% and 3.5% in 2024, down from its previous forecast of a decline between 3.5% and 4%.
(Reporting by Savyata Mishra in Bengaluru; Editing by Pooja Desai)
