Lowe’s (LOW) earnings Q4 2019

Earnings


People walk outside a Lowe’s store in East Peoria, Ill.

Daniel Acker | Bloomberg | Getty Images

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Lowe’s shares fell Wednesday after the company reported mixed fourth-quarter results, with sales weaker than expected, and provided a disappointing forecast.

Shares are down less than 1% in premarket trading.

Here’s what Lowe’s reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 94 cents, adjusted vs. 91 cents, expected
  • Revenue: $16.03 billion vs. $16.15 billion, expected
  • Same-store sales: up 2.5% vs. 3.6%, expected

The home improvement retailer is undergoing a turnaround under Chief Executive Marvin Ellison, who stepped into the role in 2018. As part of the transformation, Lowe’s is focused on expanding e-commerce and attracting more professional homebuilders and contractors. It’s also trying to capitalize on existing strengths, such as speeding up appliance deliveries since its one of the country’s top appliance retailers.

In the fourth quarter ended Jan. 31, Lowe’s reported net income of $509 million, or 66 cents per share, compared with a loss of $824 million, or $1.03 per share, a year ago.

Excluding items, the company earned 94 cents per share, outpacing analyst estimates of 91 cents per share from Refinitiv.

Revenue rose to $16.03 billion from $15.65 billion a year ago, but was less than the $16.15 billion analysts had forecasted.

Same-store sales grew by 2.5%, far below the 3.6% analysts were predicting.

In a news release, Ellison said the company is making strides in stores and with its overhaul of Lowes.com.

“Though we are only one year into a multi-year plan, we made significant progress transforming our company and believe we are well positioned to capitalize on solid demand in a healthy home improvement market,” he said.

Ellison touted the company’s “strong expense management” in a news release. The company shut stores in Canada during the three-month period. It previously shuttered its Mexico business.

Lowe’s reported earnings a day after its rival, Home Depot, reported a fourth quarter that beat analysts’ estimates. Home Depot said its sales benefited from a healthy housing market and a confident consumer and were fueled by a strong holiday season. Home Depot is the larger retailer in the home improvement space. It has a bigger customer base of professional contractors and a growing e-commerce business.

Like Lowe’s, Home Depot has been making improvements to its stores and website. Home Depot is investing $11 billion over three years, a decision that’s put pressure on its margins.

Home Depot has grown in its online business, as Lowe’s lags behind and overhauls its website. Home Depot’s online sales grew nearly 21% in the fiscal fourth quarter and for 2019, when adjusted for the shorter calendar year.

Lowe’s did not break out its online sales. In a news release, Ellison said nearly all of Lowe’s sales growth in the fourth quarter came from its brick-and-mortar stores, but he said the company has “a detailed road map in place to modernize our e-commerce platform.”

Lowe’s said it expects to have sales growth of between 2.5% and 3% and same-store sales growth of 3% to 3.5% in fiscal 2020.

It forecast that earnings will be between $6.45 and $6.65 per share in fiscal 2020 on an adjusted basis. According to Refinitiv, analysts were expecting the retailer to earn between $6.34 and $6.92 per share.

Along with efforts to revamp its online business, Lowe’s named Marisa Thalberg its new chief brand and marketing officer in January. Thalberg, previously global chief brand officer at Taco Bell, reports directly to Ellison.

Lowe’s plans to hire more than 53,000 full-time and part-time employees for the spring, which is the busiest season for home improvement projects.

Read Lowe’s press release here.



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