lowe’s Quarterly results released Wednesday were mixed, with the home improvement retailer saying it was seeing “pressure” on project spending.
Although the company did not downwardly revise its full-year forecast, it updated its outlook to the lower end of its previous forecast. The company now expects total sales of $92 billion (previously $92 billion to $94 billion), with like-for-like sales expected to be flat to 2% higher. The company expects adjusted earnings per share to be $12.25 this year, compared with a range of $12.25 to $12.75.
CEO Marvin Ellison told CNBC he expects homeowners to watch their wallets for the rest of the year.
“The good news is we’re not seeing any trade-ins for these customers,” Ellison said. “They’re just sitting on the sidelines, so our expectation is that this customer will continue to be cautious in the second half of this year.”
He added that Lowe’s expects the housing market to “recover gradually.”
Lowe’s stock rose about 2% in midday trading despite the cautious outlook.
According to a survey of analysts by LSEG, the company’s fiscal second quarter results compared to Wall Street expectations:
Earnings per share: $4.40 adjusted vs. $4.22 expected Sales: $25.96 billion vs. $26.16 billion expected
For the quarter ended July 31, Lowe’s reported net income of $2.4 billion, or $4.27 per share, about the same as the year-ago period. The company reported adjusted earnings, excluding one-time factors and including duty refund benefits, of $4.40 per share.
Lowe’s also said the tariff refund boosted its earnings per share by 11 cents in the quarter. Ellison told CNBC that the company received about $80 million in tariff refunds in the quarter.
The company reported total sales of $25.96 billion for the quarter, up from $23.96 billion in the year-ago period. Lowe’s said comparable sales rose 0.2%, due in part to strong sales in its professional and home services.
Lowe’s also saw a 15.7% increase in online sales, but added that the performance was partially offset by macroeconomic pressures on DIY customers.
“We are really pleased with our fifth consecutive quarter of positive sales, driven by the strong performance of our residential installation businesses – Pro, Online and Home Services, and the continued advancement of our Total Home strategy,” Ellison told CNBC.
Ellison said on a conference call with analysts that the company felt “increased competitive pressure” in July, but added that Lowe’s is committed to delivering value, innovation and differentiation to beat competitors.
He emphasized that Lowe’s does not believe the July impact is a “new normal,” but rather “temporary.”
“We believe this is a result of our competitors having tariff refunds and finding other ways to use those dollars to grow their top line, so we don’t see this as a historical change,” Ellison said on a conference call.
Ellison told CNBC that Lowe’s didn’t follow the trend of competitors using tariffs to lower prices because it didn’t think it was “prudent” to do so.
“We feel strongly that we want to provide high returns to our shareholders and we avoid following any aggressive pricing practices,” he said.
Ellison added that as the company moves into the second half of this year and receives tariff refunds, Lowe’s will “first think about how to share that refund with our customers.”
The gains come as home improvement retailers grapple with a weak housing market and cautious consumers.
row’s rival home depot said in an earnings call Tuesday that it does not see customers returning to large projects and continues to operate in “frozen housing market conditions.”
Ellison told CNBC that DIY customers need to have more confidence in their discretionary spending to lift the outlook.
“I don’t really care about interest rates or housing turnover, I focus on that. We can’t control those things,” he said.
