A Lowe's store is located in Brooklyn on February 27, 2024 in New York City.
Spencer Platt | Getty images
Lowe's He exceeded the quarterly profits and income expectations of Wall Street on Wednesday and said that his fall in sales should end next year.
The home improvement retailer said that he hopes that total full -year sales will range between $ 83.5 billion to $ 84.5 billion, which at the upper end would be higher than their total income of $ 83.67 billion for fiscal year 2024. He said that he hopes that comparable sales are flat to 1% year after year and earnings per share to vary approximately $ 12.15 to $ 12.40 .40 .40 .40 .40 .40 .40 .40 .40 .40 .40 .40 .40 .40 .40 .40 .40 .40 .40 .40 .40 .40. .40.
In the company's profit call, CEO Marvin Ellison emphasized that Lowe still faces “a challenging home improvement market.”
He said that high mortgage rates have created “a significant gap between current rates for housing buyers and the lowest rates that many owners currently enjoy.” That has led to a “block effect” that prevents consumers from buying and selling, he said.
Even so, he said, Lowe's has advanced with investments in his own strategy, such as attracting more businesses from home professionals, so he is “well positioned to capitalize on the recovery of home improvements and take participation when the market is inflicted.”
This is what the company reported for the fourth fiscal quarter compared to what Wall Street expected, based on an LSEG analysts survey:
- Profit per action: $ 1.93 adjusted compared to $ 1.84 expected
- Revenue: $ 18.55 billion compared to $ 18.29 billion expected
Lowe's shares increased almost 2% on Wednesday, after the company's leaders said they expected sales trends to improve, but that they were even more or less flat since last year.
In the three -month period that ended on January 31, Lowe's net income was $ 1.13 billion, or $ 1.99 per share, compared to $ 1.02 billion, or $ 1.77 per share, in the period of the previous year. The income fell $ 18.60 billion in the quarter of the previous year.
The Lowe -adjusted earnings figure excluded a profit gain of $ 80 million associated with the 2022 sale of its Canadian retail business, which added 6 cents per share to the profits of the fourth quarter.
Investors are looking for signs that the home improvement market is taking up again. The slowest housing rotation and the highest indebted costs have kept some customers outside. Lowe's net sales for fiscal year 2024 totaled $ 83.67 billion, 3% less than the previous fiscal year.
In the fourth fiscal quarter, trends looked better. Comparable sales increased 0.2%, augmented by online gains, the high growth of a single digit between home professionals and sales related to reconstruction efforts after Milton and Helene hurricanes. That slightly positive metric finished eight consecutive quarters of comparable sales decreases. It also exceeded Wall Street expectations. Analysts had anticipated a 1.8% decrease in comparable sales.
A hard real estate market
Even so, Lowe's leaders said they have not seen changes in the backdrop of the house. Ellison said in the earning call that the company is closely tracking two factors that would indicate a return to an expense of more typical home improvements: an increase in DIY spending on more expensive goods and more services expenses, such as paying home facilities.
In the earning call, CFO Brandon Sink said the retailer awaits a “more or less flat” household improvement market this year, with household professionals that exceed DIY customers due to repair and maintenance projects.
Lowe competitor, Home DepositLittle won the fourth quarter of Wall Street on Tuesday and also broke a streak of eight consecutive quarters with comparable sales.
However, Home Depot financial director Richard McPhail said the company does not expect the real estate market or mortgage rates to change. Instead, he told CNBC that he believes that consumers will gradually get used to high rates as “a new normality.”
Ellison echoed those feelings in a call with CNBC, saying that he hopes that the owners and the possible housing buyers reach a point where they accept the highest rates and decide to modernize the kitchen, finish the basement or build the cover anyway.
“I can't give you the date, the time, but we believe we are going to see what takes place, and when you do, we are in a perfect position to capitalize it,” he said.
How Lowe's is trying to increase sales
With that toughest backdrop in mind, Lowe's has tried to move the needle investing in its online business, attracting more sales of contractors, electricians and other professionals and expanding offers based on the value for housing owners.
The sales of main appliances, a category often driven by purchases after an article ages or rests, grew in the quarter compared to the period of the previous year, said Bill Boltz, Executive Vice President of Marketing, in the company's profit call. He said that Lowe's has doubled the number of deliveries the next day in recent years, and can deliver and install main appliances the next day in almost all the postal codes of the United States.
Online sales grew 9.6% year after year, as customer traffic increased, especially in Black Friday and Cyber Monday.
As customers are looking for value, Lowe's launched a new private brand called Lowe's Essentials with products that cost $ 10 or less, such as cabinet hangers, gardening tools and water cans, Boltz said about the earning call. These elements are on display near the front of the stores.
Last year, Lowe's launched a loyalty program for DIY clients. Until now, it has attracted 30 million members, and they are surpassing non -members in almost 50%, Boltz said in the earning call.
“It is clear that these clients see the value in this free program, which now gives them even more incentives to choose Lowe's,” said Boltz.
During the spring sales season, Lowe's will offer exclusive offers and toileries for those members, he said.
Professionals have also been an area of growth for Lowe's, mainly because it had a lot of improvement margin, Ellison told CNBC. He described it as “one of the most broken parts” of the Lowe business when it started as CEO in 2018.
The company has increased dedicated personnel for professionals, adjusted its inventory to have the correct combination of products and improved its website, so that professionals can easily make orders of items that they buy frequently, he said.
However, Lowe's Pro Business is smaller than Home Depot. Sales of DIY customers represent approximately 70% of Lowe sales. In Home Depot, pro accounts sales for approximately half of sales and growth of the company, especially after buying the SRS distribution, a company that sells supplies to professionals in roof business, swimming pools and landscaping.
Ellison told CNBC that Lowe's is waiting to harvest all the benefits of the changes that are made in his business.
“We fix our professional business,” he said. “We fix our online business. We fix our home service business. We drastically improve our supply chain. The only thing that has not happened for us is that we have not had a healthy DIY owner since they left the pandemic.”
Lowe's shares closed on Wednesday at $ 247.07. As of Wednesday, the company's shares rise less than 1% so far this year. That is almost in line with 1% profits of the S&P 500 during the same period.
