Lowe’s, the popular home improvement retailer, has surpassed earnings expectations for the fourth quarter of the fiscal year. Despite a decline in sales and a forecast for further revenue decline in the upcoming year, the company managed to outperform Wall Street’s projections.
CEO Marvin Ellison acknowledged that the company had experienced a “greater-than-expected pullback” on pricier items and discretionary home projects. This trend, along with economic uncertainty, led Lowe’s to reduce its full-year forecast in November. The company expects total sales of $84 billion to $85 billion for the current fiscal year, a decrease from $86.38 billion in fiscal 2023. Additionally, it anticipates a decline of 2% to 3% in comparable sales compared to the prior year.
For the fourth quarter, Lowe’s reported earnings per share of $1.77, surpassing the expected $1.68. Revenue also exceeded expectations, reaching $18.60 billion compared to the projected $18.45 billion. Net income for the period was $1.02 billion, or $1.77 per share, compared to $957 million, or $1.58 per share, in the previous year.
Sales for Lowe’s fell from $22.45 billion in the same period last year. The company attributed this decline partly to an additional week and sales from its Canadian business being included in the prior-year quarter. Comparable sales saw a significant drop of 6.2% year over year, mainly due to weaker demand for do-it-yourself projects and unfavorable weather conditions in January. However, sales for home professionals remained flat compared to the previous year.
During the fourth quarter, Lowe’s allocated $404 million for share buybacks and paid $633 million in dividends. Despite the challenges faced by the company, Lowe’s shares have seen a modest increase of nearly 4% this year, trailing behind the approximately 6% gains of the S&P 500 index during the same period. As of Monday’s close, Lowe’s shares were valued at $231.32, with a market value of approximately $133 billion.
Lowe’s biggest competitor, Home Depot, also reported better-than-expected earnings and revenue, but experienced a decline in sales for the year. Home Depot attributed this to customers delaying larger projects due to higher interest rates. Both companies have been navigating through a period of moderation after experiencing a surge in demand during the pandemic.
Despite the challenges faced by Lowe’s, the company remains committed to meeting customer needs and providing quality products and services in the home improvement sector. With its strong financial performance, Lowe’s aims to overcome the decline in sales and navigate through economic uncertainties in the upcoming year.
