Lowe’s beats on quarterly sales, but lowers full-year profit forecast amid economic uncertainty

Lowe’s on Wednesday posted a year over year sales increase for the quarter, but the company lowered its full-year profit outlook slightly to reflect a tougher economic backdrop.

The home improvement retailer now expects full-year total sales to be $86 billion, up from its previous expectations of $84.5 to $85.5 billion, because of a recent acquisition. However, it said it expects comparable sales, an industry metric that takes out one-time factors, to be flat compared to a year ago compared with the prior range it had shared of flat to up 1%.

For the full year, it now expects adjusted earnings per share of approximately $12.25, on the lower side of its previous range of $12.20 to $12.45.

In a news release, the company said it revised its outlook to “reflect the ongoing uncertainty in the macroeconomic environment” and the acquisition of Foundation Building Materials, which closed last month.

Here’s what the retailer reported for the fiscal third quarter compared with Wall Street’s estimates, according to a survey of analysts by LSEG:

• Earnings per share: $3.06 adjusted vs. $2.97 expected
• Revenue: $20.81 billion vs. $20.82 billion expected

In the three-month period ended Oct. 31, Lowe’s net income fell to $1.62 billion, or $2.88 per share, compared with $1.7 billion, or $2.99 in the year-ago period. Revenue increased from $20.17 billion in the year-ago quarter.

Rival Home Depot on Tuesday lowered its full-year profit forecast after missing Wall Street’s quarterly earnings expectations for the third quarter in a row. Chief Financial Officer Richard McPhail attributed weaker earnings to lower-than-usual storm activity, a tough housing market and consumer uncertainty.

Like Home Depot, Lowe’s has tried to attract more business from contractors and other home professionals to offset weaker do-it-yourself sales. In August, Lowe’s announced it had struck a deal to acquire Foundation Building Materials, a distributor of drywall, insulation and other interior building products for large residential and commercial professionals, for about $8.8 billion.

Earlier this year, Lowe’s announced another pro-focused acquisition. It said in April it had agreed to buy Artisan Design Group, which provides design services and installation of flooring, cabinets and countertops for homebuilders and property managers, for nearly $1.33 billion.

On the company’s earnings call in August, Lowe’s CFO Brandon Sink said he expected the company’s own strategy, not an improving industry backdrop, to drive sales for the year. He said the retailer expects “a roughly flat home improvement market” for the year.

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