Tags: lowes | home depot | earnings | profits

Lowe's Net Trails Estimates as Home Depot Wins Spring Battle

Wednesday, 20 May 2015 07:05 AM

Lowe’s Cos. posted first-quarter profit that trailed analysts’ estimates as it failed to fend off a promotional blitz from rival Home Depot Inc. during the retailers’ most important season.

Profit in the three months through May 1 was 70 cents a share, Mooresville, North Carolina-based Lowe’s said Wednesday in a statement. Analysts estimated 74 cents.

Lowe’s has given more prominent space to seasonal goods like patio furniture to draw more spending from Americans, who have seen their home values rise. This past quarter included the start of the spring selling season, a bigger revenue generator than Christmas for home-improvement retailers. Home Depot, which posted profit that topped estimates Tuesday, ran a full week of online promotions and 11 days of discounts in its stores to attract homeowners seeking to stock up on tools, grills and yard supplies.

Lowe’s shares fell 6.9 percent to $66.90 at 6:27 a.m. in early trading in New York. The stock had gained 4.4 percent this year through Tuesday, compared with a 7 percent increase for Home Depot.

Same-store sales, a key yardstick of success in retail, rose 5.2 percent in the quarter. Analysts projected a gain of 6.1 percent, according to Consensus Metrix. Total revenue increased 5.4 percent to $14.1 billion, trailing analysts’ $14.3 billion estimate.

Lowe’s net income rose 7.9 percent to $673 million, or 70 cents a share, from $624 million, or 61 cents, a year earlier. The company repeated its forecast that profit this year would be about $3.29 per share. Analysts estimated $3.31.

Home Depot

Home Depot’s first-quarter sales and profit both beat analysts’ expectations, and the retailer boosted its annual forecast on both fronts. The company’s same-store sales gained 6.1 percent, beating Lowe’s increase.

Both companies are posting better sales growth than most of the retail industry as people shift spending to their homes and away from apparel and other consumer goods. For example, Wal- Mart Stores Inc. said Tuesday that total U.S. same-store sales rose 1 percent, missing estimates.

Data released by the Commerce Department Tuesday underscored the homebuilding industry’s health, which is helping both retailers. U.S. housing starts surged 20 percent in April to the highest level in more than seven years.

While those figures were encouraging, Lowe’s and Home Depot care more about residential real estate prices. The National Association of Realtors expects about 5.83 million new and existing homes to be sold this year, but there are about 74 million American homeowners who may spend more on their dwellings if they think they’re rising in value.

The data on the pricing front has been strong as well. The median price of a single-family home rose 7.4 percent in the first three months of the year, according to the Realtors group. Prices climbed in 85 percent of U.S. metropolitan areas, the group said.

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Lowe's Cos. posted first-quarter profit that trailed analysts' estimates as it failed to fend off a promotional blitz from rival Home Depot Inc. during the retailers' most important season.
lowes, home depot, earnings, profits
Wednesday, 20 May 2015 07:05 AM
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