Lowe's Reports Better-Than-Expected 4Q Sales, but Home-Improvement Market Remains Fluid — Update
By Denny Jacob
Lowe's topped Wall Street views for sales and earnings after the home-improvement market reached an inflection point in the latest quarter.
The company on Wednesday reported a slight decline in overall sales, though not as sharp as feared by some on Wall Street. Results were boosted by sales in its professionals business, demand during the holidays and rebuilding efforts in the wake of recent hurricanes. But cautious consumer spending has kept many big-ticket renovations on hold.
"With 70% of our revenue coming from the DIY customer, when those big ticket discretionary categories feel pressure, it disproportionately impacts our business and our revenue," Chief Executive Marvin Ellison said on an earnings call.
Shares rose 3%, to $250.23, in morning trading.
The company, like its larger competitor Home Depot, said it could see improvements in kitchen and bathroom remodels with lower interest rates and higher home-improvement demand. Both issued guidance that came below the Street's estimates.
Lowe's said near-term uncertainty in the home-improvement market was reflected in its 2025 outlook as it guided for same-store sales to be about flat to up 1% compared with 2024.
The Mooresville, N.C., company forecast sales between $83.5 billion and $84.5 billion, while consensus estimates sat closer to $84.56 billion. The high-end of its forecast for earnings per-share for the year also came in a few cents below expectations.
Lowe's focus on small- and mid-sized pro customers continues to pay off. Bill Boltz, executive vice president of merchandising, said the Pro business saw positive comparables across all merchandise categories in the quarter, including in building materials and lumber in response to storm-recovery efforts.
In the latest quarter, Lowe's saw sales edge down to $18.55 billion from $18.6 billion. Analysts polled by FactSet expected $18.28 billion.
Earnings rose to $1.13 billion, or $1.99 a share, for the three months ended Jan. 31, compared with $1.02 billion, or $1.77 a share, in the prior-year period. Stripping out certain one-time items, earnings of $1.93 a share came in ahead of estimates for $1.84 a share in adjusted earnings.
A turn in the housing market by way of lower interest rates would be critical to continued success at Lowe's going forward as demand for home renovation is expected to be unlocked as a result.
"It comes down to discretionary big ticket for DIY," Ellison said. "That to us is one of the key indicators that the homeowner is going to be returning to what we consider to be a normal cadence of home improvement spend."
Write to Denny Jacob at denny.jacob@wsj.com