Citing a challenging do-it-yourself market facing macroeconomic headwinds, Lowe’s Cos. beat a second-quarter earnings forecast despite a decline in comparable sales during the period.
Net earnings were $2.38 billion, or $4.17 per diluted share, versus $2.67 billion, or $4.56 per diluted share, in the year-previous quarter, the company reported. In the period, the Lowe’s recognized a $43 million pre-tax gain associated with the 2022 sale of its Canadian retail business, which boosted second quarter diluted earnings per share by seven cents. With the gain on the sale excluded, second quarter 2024 adjusted diluted EPS was $4.10.
An analyst consensus estimate for the quarter published by Yahoo Finance put adjusted diluted earnings at $3.97 and revenues at $23.9 billion.
Comparable sales in the quarter declined 5.1% year over year, Lowe’s indicated, with the decrease driven by continued pressure in bigger ticket DIY discretionary spending and unfavorable weather that hurt sales in seasonal and other outdoor categories, partially offset by positive comps in the professional business and e-commerce.
Net sales were $23.59 billion versus $24.96 billion in the year-earlier quarter. Operating income was $3.45 billion versus $3.89 billion in the year-prior period.
In a conference Marvin Ellison, Lowe’s chairman, president and CEO, said the company continues to apply technology to improve customer experience, and he citied the company’s virtual reality Apple Vision Style Studio. He said, “uncertainty” in the macroeconomic environment looms over the immediate future as consumers remain concerned about financial prospects. The situation is affecting consumer behavior that directly affects Lowe’s, Ellison said.
“People aren’t moving” as often as they typically did, Ellison said, given uncertainty and high mortgage rates. He added service spending by affluent consumers has remained pressured longer than expected. However, consumers still have to maintain their homes and Millennials continue shifting to home ownership, which provides long-term opportunity for the home improvement sector, Ellison said.
Ellison said, “The company delivered strong operating performance and improved customer service despite a challenging macroeconomic backdrop, especially for the homeowner. At the same time, we continue to build momentum with our Total Home strategy reflected by our mid-single-digit positive comps with the Pro customer this quarter. As we look ahead, we are confident that we are making the right long-term investments to take share when the market recovers.”
