MOORESVILLE, N.C., Mon Aug 20, – Lowe’s Cos. Inc. reported weaker-than-expected quarterly results and cut its profit outlook for the fiscal year as the world’s second-largest home improvement chain lost market share to larger rival Home Depot Inc.
Lowe’s shares fell more than 8 percent in premarket trading.
The lackluster results came just days after Home Depot beat Wall Street’s quarterly profit estimates with the help of cost controls and market share gains, and raised its earnings outlook for the year.
Lowe’s recently decided to offer fewer discounts on expensive items like appliances, in sync with its bigger plan to offer “everyday low prices” rather than promotions. The move has driven some shoppers away.
Sales suffered in the traditionally strong second quarter, which ended on August 3, as unseasonably warm weather early in the year pulled some demand into the first quarter.
Sales at Lowe’s stores open at least a year fell 0.4 percent, including a 0.2 percent decrease for the U.S. business, marking the 13th straight quarter that the company trailed Home Depot Inc in same-store sales.
“Lowe’s inability to drive sales despite discounting remains a concern,” Janney analyst David Strasser said in a research note.
Net earnings fell to $747 million or 64 cents a share, from $830 million, or 64 cents a share, a year earlier.
Analysts on average had expected a profit of 70 cents a share, according to Thomson Reuters I/B/E/S.
Sales fell 2 percent to $14.25 billion, while analysts had expected $14.46 billion.
Lowe’s, which has stores in the United States, Canada and Mexico, now expects flat total sales for the fiscal year ending on February 1. It forecast earnings of $1.64 a share for the period, compared with an outlook of $1.73 to $1.83 that it gave in May.
Lowe’s shares were down 8.1 percent at $25.60 in trading before the market opened.