Lowe's forecast underscores concerns over tardy US home improvement recovery
Reuters
Published Feb 27, 2024 06:13AM ET
Updated Feb 27, 2024 10:25AM ET
By Deborah Mary Sophia
(Reuters) -Lowe's Cos on Tuesday joined larger rival Home Depot (NYSE:HD) in signaling a slower recovery in the home-improvement market as consumers remain tight-fisted against the backdrop of sticky inflation and uncertainty over the economy's prospects.
Investors were betting on a more normalized U.S. home improvement environment this year after 2023 was dubbed a transition period as the industry digested the outsized gains from the pandemic.
Persistent inflation and a stagnant housing market were forcing consumers to hold out on big-ticket purchases, CEO Marvin Ellison said on a post-earnings call.
"Unfortunately, it's still very difficult to predict" when home improvement demand will inflect, Ellison said.
The company is particularly squeezed as Do-It-Yourself (DIY) customers, who generate 75% of its total sales, are allocating fewer dollars to large-scale home remodeling and cutting back on discretionary items as they take up only necessary repair work.
Lowe's (NYSE:LOW) forecast comparable sales to be down 2% to 3% in fiscal 2024, while analysts were expecting a 1.13% drop.
"We expect comp sales to improve (in the second half) ... To be clear, we are not forecasting an improvement in demand trends this year. Rather, the compares are easier in the second half," CFO Brandon Sink said.
The company is banking on its new DIY loyalty program, expected to roll out nationwide in March, to help draw demand from more value-sensitive customers.
The No.2 U.S. home-improvement chain projected annual per-share earnings between $12.00 and $12.30, versus LSEG estimates of $12.75.
"Maybe (the forecast is) telling us that the recovery is being pushed out a little bit," D.A. Davidson analyst Michael Baker said.
Still, Lowe's topped fourth-quarter expectations on demand from Pro-customers, sending its shares up 3% in early trade.
Per-share profit of $1.77 beat estimates of $1.68, while same-store sales declined 6.2% for the quarter ended Feb. 2, compared with expectations for a 7.06% drop.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.