Lowe’s results miss estimates, underperforming Home Depot

MOORESVILLE, N.C., Wed May 22, 2013 — Lowe’s Cos. Inc. reported a weaker-than-expected quarterly profit on Wednesday, hurt by colder-than-usual weather at the start of the spring selling season and strong competition from larger rival Home Depot Inc. 
The results contrasted sharply with those of Home Depot and signaled that Lowe’s, the world’s No. 2 home improvement chain, was still struggling to narrow the performance gap with the industry leader.
Lowe’s sales fell 0.5 percent to $13.09 billion in the first quarter ended on May 3, missing the analysts’ average estimate of $13.45 billion. The company’s shares fell 3.3 percent to $42.45 in trading before the market opened.
Sales at stores open at least a year dipped 0.7 percent. It was the 16th straight quarter that Lowe’s posted weaker same-store sales than Home Depot.
“The spread between Home Depot and Lowe’s (same-store sales) expanded in the first quarter, something we had worried might happen,” said Janney Capital Markets analyst David Strasser.
Lowe’s stocked more lawn and garden products than Home Depot and therefore suffered more from the unfavorable weather, Strasser said. At the same time, he said, Home Depot had more of a presence in California, where housing has made a strong comeback.
While Lowe’s has been working to improve product selection and customer service, it has yet to turn around its business.
As part of its makeover, the company has started offering everyday low prices and products targeted to specific geographic markets. It made its stores more appealing with improved signs, television displays that stream videos on how-to-do projects, and lower racks to make items easier to reach.
Lowe’s has also increased its assortment of products available online and started mylowes.com, a site that allows shoppers to save their room dimensions, create a shopping list and set reminders to buy items such as air filters and batteries for smoke alarms.
Lowe’s, which was also slower than Home Depot to cut costs in the years after the housing collapse, said its first-quarter net earnings rose to $540 million, or 49 cents a share, from $527 million, or 43 cents a share, a year earlier.

Lowe’s efforts to cut costs, spur sales paying off

MOORESVILLE, N.C., Mon Nov 19, 2012 – Lowe’s Cos. Inc.’s reported a higher-than-expected quarterly profit on Monday in a sign its efforts to cut costs and improve its selection of home improvement items are working.

Preparation and rebuilding efforts tied to Superstorm Sandy and an improving housing market also boosted business at Lowe’s, the world’s No. 2 home improvement chain.

Shares of Lowe’s, which also raised its sales forecast for the year, were up $2.10, or 6.5 percent, at $34.08 in midday trade.

Rival Home Depot has won shoppers from Lowe’s in recent years by offering better pricing and service, while Lowe’s strategy of “everyday low prices” rather than promotions has driven some customers away.

Lowe’s has cut jobs, curbed store expansion and streamlined its supply chain to reduce costs while reining in inventory.

“The home improvement sector is still growing, so this is a sign that Lowe’s is getting more of their fair share,” Morningstar analyst Peter Wahlstrom said of the results.

Lowe’s misses estimates, lags Home Depot

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.

Like Home Depot, Lowe’s gains from warm winter

MOORESVILLE, N.C. – Lowe’s Cos., the world’s second-largest home improvement chain, reported higher-than-expected quarterly sales as a warm winter prompted many homeowners to take up renovation projects that they normally save for the spring.

The results echoed those from larger rival Home Depot Inc., which also reported stellar sales due to strong demand for everything from paint to concrete in the unseasonably warm quarter.

Monday’s results boosted Lowe’s shares 2.7 percent to $27.90 and excited some industry watchers over the prospects of the home-improvement segment once the housing market recovers.

“We encourage investors to look past the near term and think about double-digit margins for all when housing recovers,” said Credit Suisse analyst Gary Balter, who has an “outperform” rating on both chains.

Lowe’s is also benefiting from a host of initiatives to win shoppers, including a recent move to shift away from promotions to more every-day low prices.

The retailer has also started offering more localized products, improved its website and tried to enhance the in-store experience by using better signage and technology in stores.

“This also shows a company making progress in its transition,” said Janney Capital Markets analyst David Strasser, who has a “buy” rating on the stock.

The company’s sales rose 11 percent to $11.63 billion in the fourth quarter that ended on February 3, well ahead of the analysts’ average estimate of $11.34 billion, according to Thomson Reuters I/B/E/S. Sales at stores open at least a year rose 3.4 percent.

Net income rose to $322 million, or 26 cents a share, from $285 million, or 21 cents a share, a year earlier.

Excluding items, the profit was 24 cents a share, in line with the analysts’ average estimate, according to Thomson Reuters I/B/E/S.

For the current fiscal year, Lowe’s forecast earnings of $1.75 to $1.85 a share.

Home Depot outshines Lowe’s again; raises its fiscal outlook

ATLANTA ― Home Depot Inc. raised its fiscal-year outlook for the third time in six months as a host of efforts to improve distribution and boost customer service helped the No. 1 home improvement chain gain share from archrival Lowe’s Cos. Inc.

Home Depot, which reported stronger-than-expected quarterly results on Tuesday, also raised its quarterly dividend by 16 percent to 29 cents per share.

The news boosted its shares 1.3 percent and came the day after Lowe’s also beat quarterly profit estimates and laid out a blueprint to win back shoppers from its larger competitor.

Home Depot is benefiting from opening more centralized distribution centers, better merchandising tools, efforts to redirect labor to more customer-facing tasks and the use of more technology in stores.

The company has also been quicker to curb store growth and cut costs than Lowe’s, and in some cases has benefited as housing markets have improved in regions where it has a heavy presence.

“Overall, they are just out-executing Lowe’s at this point,” RBC Capital Markets Scot Ciccarelli said. “Lowe’s is trying to copy a lot of these same efforts that I think has helped Home Depot, but it is going to take a while for them to benefit from some of the changes that they are currently making.”

Home Depot’s sales at stores open at least a year rose 4.2 percent globally, including a 3.8 percent rise in the United States. This was the 10th consecutive quarter that the company has outshone Lowe’s, whose same-store sales rose 0.7 percent in the quarter.

Net income rose to $934 million, or 60 cents a share in the third quarter ended on October 30, from $834 million, or 51 cents a share, a year earlier.

Analysts on average were expecting a profit of 58 cents a share, according to Thomson Reuters I/B/E/S.

Sales rose 4.4 percent to $17.33 billion, beating the analysts’ average estimate of $17.12 billion.

For the current fiscal year, Home Depot sees earnings of $2.38 a share, up from its prior outlook of $2.34. It continues to expect sales to rise 2.5 percent in the period.

The dividend is payable on Dec. 15 to shareholders of record on the close of business on Dec. 1.

Lowe’s closes stores, slashes new store plan while citing profitability concerns

NEW YORK ― Lowe’s Cos. Inc. said on Monday it is closing 20 of its U.S. stores, eliminating nearly 2,000 jobs, and the home improvement retailer now plans to open far fewer locations in the future, citing the need to improve its profitability.

Lowe’s, which operates about 1,700 stores in the United States, said it closed 10 stores on Sunday and would close another 10 within a month. The expenses associated with the closing will come to 17 cents to 20 cents per share.

Some 1,950 workers will lose their jobs.

It also said it plans to open only 10 to 15 new North American stores per year starting in 2012, down from a previous goal of 30.

Chief Executive Robert Niblock said in a statement that the company has to “make tough decisions” to improve profitability.

Lowe’s reduced its full-year sales and profit outlook in August as U.S. homeowners put off renovations.

Lowe’s becomes the latest retailer to pare the number of stores it operates amid tepid consumer demand.

Gap Inc. last week reaffirmed a plan announced in June to close 200 out of its 889 namesake U.S. stores while luxury retailer Saks Inc. has closed seven of its department stores in the past two years and plans to eventually close a few more over time.

Lowe’s sets aside $5 billion for share repurchase program

MOORESVILLE, N.C. ― Lowe’s Companies Inc. authorized a $5 billion share repurchase program, about a fifth of its market value, and said it expects to use the full amount over the next two to three years.

The second largest U.S. home improvement chain also set a regular quarterly dividend of 14 cents a share.

Lowe’s, which has declared a cash dividend each quarter since going public in 1961, had raised its divided by 27 percent in May.

Last week, the retailer reported weaker-than-expected quarterly sales and cut its fiscal-year outlook for the second time in three months as homeowners put off big renovations in an anemic U.S. economy.

U.S. companies are increasingly using their cash to buy back their own shares, as they bet on a Wall Street rebound. As of August 11, U.S. companies had bought back $305.2 billion in shares this year, eclipsing the $300.7 billion total for all of 2010 and 2½  times the 2009 amount.

Shares of the company, which closed at $19.31 on Friday on the New York Stock Exchange, were inactive before the bell.

Home Depot raises outlook; eclipses competitor Lowe’s

NEW YORK ―  Home Depot Inc., the world’s largest home improvement chain, raised its fiscal-year profit forecast for the second time in three months on Tuesday as timely promotions and renewed focus on cheaper products helped it gain market share from rival Lowe’s Cos Inc.

The news boosted Home Depot’s shares by 2.3 percent to $32.20 and hurt Lowe’s shares by 1.6 percent to $19.36 in premarket trading.

Home Depot has been quicker to cut costs than Lowe’s, and in some cases has benefited as housing markets have improved in regions where it has a heavy presence.

Lowe’s reported weaker-than-expected quarterly sales on Monday and cut its fiscal-year outlook for the second time in three months.

Home Depot said it still expects fiscal-year sales to rise 2.5 percent. It forecast earnings of $2.34 a share excluding future stock repurchases, up from a prior forecast of $2.24.

“They are operating at a high level, taking chances where appropriate in merchandising, leveraging technology investments, and benefiting from a return to more localized marketing and merchandising in the store,” said analyst David Strasser of Janney Capital Markets.

In the second quarter, Home Depot’s same-store sales, or sales at stores open at least a year, rose 4.3 percent globally, including a 3.5 percent rise in U.S. same-store sales, making it the ninth consecutive quarter that it has outshone its smaller rival. Lowe’s same-store sales fell 0.3 percent in the quarter.

Strasser said the 4.3 percent same-store sales rise was better than his 2.5 percent estimate. Promotional programs, including a U.S. Independence Day appliance event and a late July event on storage products, helped win shoppers, he added.

“Home Depot comps are now running well ahead of GDP growth,” Credit Suisse analyst Gary Balter said, adding that the chain’s back half outlook implies that sales trends will modestly strengthen.

Balter said Home Depot’s stock is undervalued and it is set up for significantly stronger earnings when the housing sector stabilizes.

U.S. homebuilder sentiment remained stuck near historic lows this month, even as consumer sentiment in the world’s largest economy worsened sharply in early August, falling to the lowest level in more than three decades. U.S. economic growth was anemic in the first half of the year.