Lowe's (LOW) Second Quarter 2024 Results

Lowe's The home improvement retailer on Tuesday lowered its full-year outlook as quarterly sales declined and it said it expects spending on do-it-yourself projects to weaken.

The company said it now projects total sales of between $82.7 billion and $83.2 billion for the full year, compared with the $84 billion to $85 billion it previously expected. It said it expects comparable sales to fall between 3.5% and 4%, compared with its previous forecast of a decline of 2% to 3%. It anticipates adjusted earnings per share to be about $11.70 to $11.90, compared with its previous forecast of between $12.00 and $12.30.

In a press release, Lowe's cited “lower-than-expected home improvement sales and a pressured macroeconomic environment.”

Here's what the company reported for the second fiscal quarter compared with what Wall Street expected, according to a survey of analysts by LSEG:

• Earnings per share: Adjusted $4.10 vs. expected $3.97
• Revenue: $23.59 billion versus the expected $23.91 billion

In the three-month period ending August 2, Lowe's net income fell to 2.38 billion dollars, or $4.17 per share, compared with $2.67 billion, or $4.56 per share, in the same period a year ago.

Lowe's posted a pretax gain of $43 million from the sale of its Canadian retail business in 2022, boosting its second-quarter profit. That boosted the company's earnings per share in the period by 7 cents. Excluding the gain, the company earned $4.10 per share.

Net sales fell from $24.96 billion a year earlier. Lowe's posted a year-over-year sales decline for the sixth consecutive quarter.

Comparable sales, an industry metric that excludes one-time factors such as store openings and closings, fell 5.1% as the company said customers took on fewer discretionary home projects and unfavorable weather hurt sales of outdoor and seasonal items. It said those declines were partially offset by growth in its online business and sales to home professionals, such as contractors and electricians.

Lowe's shared its quarterly results and outlook at a time when investors and economists are watching consumer spending closely. Recent economic data and corporate earnings have given mixed indications about the financial health of American households as the Federal Reserve mulls an expected rate cut.

Job growth in July was much lower than expected. However, on the other hand, WalmartJohn David Rainey, chief financial officer of Goldman Sachs, told CNBC that the largest U.S. retailer does not “see any further deterioration in consumer health.” Goldman Sachs also lowered the odds of a recession to 20%.

For home improvement retailers, the strain may be heightened by higher mortgage rates and elevated borrowing costs. Lowe's rival, House depositLast week, quarterly earnings and revenue beat Wall Street expectations. However, the company said it expects the second half of the year to be weaker than expected as consumers continue to have a “procrastinatory mentality.”

In an interview with CNBC, Home Depot Chief Financial Officer Richard McPhail said that not only are customers putting off projects because of higher interest rates, but they also have “a sense of heightened uncertainty in the economy,” even though the majority of Home Depot customers own homes and are seeing strong gains in property values.

Lowe's shares closed Monday at $243.21. As of Monday's close, the company's stock was up about 9% so far this year, lagging the S&P 500's gains of nearly 18%.

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