Lowe’s has revised its annual sales forecast downward as customer spending on do-it-yourself projects decreases, resulting in a nearly 13% drop in third-quarter sales. The company now expects a sales total of about $86 billion for the fiscal year, considerably lower than its previous outlook. CEO Marvin Ellison attributes the decline to a greater-than-expected pullback by customers on discretionary projects and big-ticket purchases, although sales to home professionals have risen. Despite these challenges, the company seeks to focus on providing value and convenience during the upcoming holiday season. Lowe’s third-quarter earnings per share of $3.06 slightly exceeded analysts’ expectations, but revenue fell short at $20.47 billion compared to the expected $20.89 billion. This reflects the broader trend in the home improvement industry, as both Lowe’s and its competitor Home Depot face cooling demand amidst a slowdown in Americans’ pandemic-driven home improvement frenzy and rising mortgage rates. On the bright side, Lowe’s net income for the fiscal third quarter saw a substantial increase from $154 million to $1.77 billion, driven in part by a $2.1 billion impairment charge. While Lowe’s stock has risen moderately this year, it lags behind the broader market performance. The company also faces stiff competition from Home Depot, which reported beating Wall Street’s fiscal third-quarter earnings and revenue expectations, despite a 3% drop in sales. Home Depot pointed out that while customers are still engaged in home improvement, they are increasingly tackling smaller and less costly projects. Meanwhile, Home Depot’s CFO expressed confidence in the waning inflationary pressure. In response to these challenges, Lowe’s stock performance has been relatively lackluster, closing at $204.44 on Monday, translating to a market value of nearly $118 billion.
Walmart’s strong Q3 results, with an increase in profits and better-than-expected financials, attract budget-conscious shoppers. However, muted annual outlook spooks investors.