Lowe’s highest earnings estimate, with gross sales in the identical retailer up 28%, warns that some DIY tendencies could fade


Shoppers wearing protective masks wait in line to pick up a store from Lowe’s Cos on Wednesday, May 20, 2020. To be entered in San Bruno, California, USA.

David Paul Morris | Bloomberg | Getty Images

Lowe’s said Wednesday that sales in the same store rose 28.1% in the fourth quarter as consumers continued to spend money on home projects during the pandemic.

This is higher than the 22% growth forecast by analysts, according to StreetAccount. Despite the strong results, Lowe’s continues to believe sales could weaken as the pandemic eases.

Lowe’s shares rose more than 3% in premarket trading on the news.

The company reported for the quarter ended Jan. 29, versus Wall Street expectations, based on an analyst survey by Refinitiv:

  • Earnings per share: $ 1.33, adjusted versus expected $ 1.21
  • Revenue: $ 20.31 billion versus $ 19.48 billion expected

Lowe reported net income of $ 978 million, or $ 1.32 per share, for the fourth quarter, compared to $ 509 million, or 66 cents per share, a year earlier.

Excluding items, the company earned $ 1.33 per share, beating the analysts surveyed by Refinitiv to $ 1.21 per share.

Net sales rose to $ 20.31 billion, beating analysts’ expectations of $ 19.48 billion.

Sales in its US stores were open for at least a year, and online sales were up 28.6% for the quarter.

Marvin Ellison, Lowe CEO, said in a press release that the company was seeing high demand across the board. Sales growth was 16% in all merchandising departments and more than 19% in all regions of the country. Online sales rose 121% in the quarter.

Lowe’s reiterated the prediction he made on an investor’s day in December. CFO David Denton had said home improvement product sales are likely to decline in 2021 as more people get Covid-19 vaccines and spend more time outside their homes. He presented three possible scenarios for a robust, moderate or weak market. In a robust market, he expects the retailer to forecast a mix-adjusted decline of between 5% and 7% in 2021. In a moderate and weak market, demand is likely to decrease by 7% to 9% and 10% respectively.

Even in a weak market, the retailer is ready to improve its operating margins. He said that since sales to do-it-yourself customers are moderate, they could gain a foothold with home professionals – a smaller section of Lowe’s customer base, but one that is set to grow.

On Wednesday, Lowe’s announced that it spent more than $ 100 million and more than $ 900 million in additional Covid-related compensation and benefits for employees in the fourth quarter. It said it spent nearly $ 1.3 billion on pandemic-related spending, including higher wages and business security measures during the fiscal year.

The company spent $ 3.4 billion on share buybacks and paid dividends of $ 452 million in the fourth quarter.

Rival Home Depot’s fourth quarter earnings also beat Wall Street’s expectations this week. The retailer reported strong demand for DIY project accessories, outdoor items like patio furniture and Christmas decorations as shoppers spend more time at home. However, there was no outlook for the year as it is uncertain how long the pandemic will last and what that means for consumer spending.

At the close of trading on Tuesday, Lowe’s shares were up nearly 35% over the past year. The company’s market value is $ 123.53 billion.

Read the full press release here.


Steven Gregory