After beating third-quarter estimates and raising its outlook, Lowe’s stock couldn’t hold on to its early gains on Tuesday. This was because storm-related sales of big-ticket items were less strong than positive same-store sales in its professional and online stores.
The stock of the company is down 4.3%, while the S&P 500 average is down 0.4%. For the quarter, Lowe’s Cos. LOW -3.72% had a net income of $1.695 billion, or $2.99 a share. This was less than the $1.773 billion, or $3.06 a share, it made during the same time last year. After taking into account one-time items, EPS was $2.89, which was higher than the $2.82 estimate set by FactSet. The sale of the Canadian retail business in 2022 brought in $54 million before taxes, which added 10 cents to EPS.
Sales dropped from $20.471 billion to $20.17 billion, but they were still higher than the $19.939 billion that FactSet predicted.
FactSet thought that same-store sales would drop 2.7%, but they only fell 1.1%.
CEO Marvin R. Ellison said in prepared comments, “Our results this quarter were slightly better than expected, even when storm-related activity is taken into account. This was driven by high-single-digit positive comps in Pro, strong online sales, and smaller-ticket outdoor DIY projects.”
Lowe’s executives talked about President-elect Donald Trump’s plan to impose new tariffs during the conference call to talk about the findings.
In answer to an analyst’s question, Ellison said, “It’s very early. Like everyone else, we’re waiting to see what happens when the Trump administration actually takes office in January.” “However, we’re happy with the steps and systems we’ve put in place since the start of the Trump administration to deal with tariffs and other problems.”
Bill Boltz, executive vice president of marketing at Lowe’s, said that the company has changed how it gets its supplies over the past few years. His words, “We will continue to work with our supply partners and private brand partners to broaden our product lines.” This has been going on for a few years. “One of our main strategies is to work closely with our suppliers so that we can handle anything that comes our way.”
Lowe’s CFO Brandon Sink said, “We’re definitely staying very close to this and getting ready for what may come from the new administration.” “About 40% of the things we sell come from outside the U.S. This includes both direct imports and national brands that we get through our vendor partners. As we look at the possible effects, we know that it will raise product prices, but the timing and specifics are still unknown at this point.”
“Just like Bill said, we think we’re ready to act if and when it does happen,” he said.
Last week, officials at Home Depot Inc. HD -0.63%, a competitor of Lowe’s, talked about what the Trump tariffs might mean.
Lowe’s also changed its outlook on Tuesday. Instead of predicting $11.70 to $11.90 in adjusted EPS for the whole year, the company now thinks it will be between $11.80 and $11.90. It now thinks sales will be between $83 billion and $83.5 billion, up from $82.7 billion to $83.2 billion earlier this year.
Same-store sales are expected to drop by 3% to 3.5%, which is less than the 3.5% to 4% drop that was predicted earlier.
Statista predicts that the company will make $11.83 per share, make $83 billion in sales, and see a 3.8% drop in same-store sales for the whole year.
So far in 2024, the stock has gone up 16.9%, while the S&P 500 SPX -0.03% has gone up 23%.
