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Lowe’s raises its earnings estimates as a good housing market, older properties gas tasks


lowes Quarterly earnings exceeded expectations on Wednesday and raised its forecast for the yr, as Americans purchase, repair and renovate properties in a tight real estate market,

Shares rose about 4% in premarket buying and selling, as the house enchancment retailer stated momentum picked up in February.

old age homeRising actual property values ​​and generational traits are driving the demand for dwelling tasks. Americans – together with millennials, the nation’s largest technology – are shopping for properties and upgrading to larger ones throughout the pandemic. This has lowered the availability of accessible properties and prompted some to rent contractors to transform loos, change ceilings or tackle different related tasks.

Those dynamics drive up gross sales for Lowe’s and Competitor, home depot,

“When home prices rise, consumers have the confidence to invest in their homes,” stated CNBC CEO Marvin Ellison.squawk box” Wednesday morning.

He added that repair and maintenance projects will drive up costs, even if inflation drives up prices and raises mortgage rates. According to data from the Federal Home Loan Mortgage Corporation, nearly half of the nation’s single-family homes were built before 1980.

Here’s Lowe’s report for the quarter ended Jan. 28, better than Wall Street’s expectation, based on a poll of analysts by Refinitiv:

  • Earnings Per Share: $1.78 vs. $1.71 Expected
  • Revenue: $21.34 billion versus $20.90 billion expected

In the fourth quarter, Lowe’s net income rose to $1.21 billion, or $1.78 per share, from $978 million, or $1.32 per share, a year ago. The results were above $1.71 expected by analysts surveyed by Refinitiv.

Sales rose to $21.34 billion from $20.31 billion last year and exceeded analysts’ expectations of $20.90 billion.

Lowe’s same-store sales in the US increased 5.1% in the fourth quarter as customers made fewer visits to the company’s website and store, but spent more when they did.

A year ago, Ellison said the shopping mix looked different as shoppers bought cleaning products and supplies for simple do-it-yourself projects. Now, major projects are driving a major chunk of procurement.

Transactions in the US fell 4.4% in the fourth quarter compared to the year-ago period. He said sales of big-ticket items that cost at least $500 grew more than 9% in the quarter. Average tickets at American stores and Lowe’s website rose 9.5% to $95.66 in the fourth quarter partly due to inflation.

Sales of home professionals also grew 23% in the three-month period. Professionals tend to be stable and more attractive customers.

Lowes historically. Has received around 20% to 25% of its total sales from professionals as compared to home depot, which derives almost half of its sales from them. Lowe’s is chasing the pros, though, with a new loyalty program and perks like reserved parking and free air for tires at its stores.

Pro sales are on the rise for another reason as well. As the Omicron version dwindles and schedules get busy again, some people are hiring contractors instead of taking on DIY projects.

Like other retailers, Lowe’s is seeing increased costs and chasing inventory due to supply chain delays. Ellison said in an interview that inflation increased nearly half of Lowe’s sales in the second half of the year.

In some categories, such as appliances, he said Lowe’s has expanded its portfolio of merchandise, so shoppers have a wider variety if an item is out of stock.

“You may not discover the precise model you need, however if you happen to’re in search of a stainless-steel, French door fridge, we will deliver you that mannequin,” he said. “It will not be within the particular model you wished whenever you arrived.”

Ellison said the retailer is working closely with suppliers, sourcing more products from the US and importing inventory from other countries. It opened Coastal Holdings distribution centers on the east and west coasts where it can store products from other parts of the world, rather than ordering periodically – an approach that could help retailers’ balance sheets, but not at ports. makes it temporarily weak. closed or crowded.

He said Lowe’s already has it on inventory in the US as it gears up for spring, its busiest season. As the weather warms, it will ship goods from coastal holding facilities to regional distribution centers and then to stores.

“It’s an additional step, however that further step has given us the flexibility to place the inventory higher than most of our opponents,” he said.

The retailer said it expects earnings per share of $13.10 to $13.60 on revenue of $97 billion to $99 billion in fiscal 2022. It had forecast earnings per share of $12.94 on revenue of $97 billion for the first year, which is a week longer than in fiscal 2021.

It said same-store sales would range from a 1% decline to a 1% increase for the full year.

As of late Tuesday, Lowe’s shares are up 27% over the past 12 months. Shares closed Tuesday at $214.59, bringing Lowe’s market value to $144.58 billion.

Read the corporate’s earnings press launch right here.


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