Lowe's Posts Higher Profit, Lowers Outlook
May 22 2019 - 9:14AM
Dow Jones News
By Kimberly Chin
Lowe's Cos. lowered its full-year earnings targets as the
home-improvement retailer continues to work through operational
challenges, such as managing costs and improving inventory.
For the year, Lowe's now expects adjusted earnings between $5.45
and $5.65 a share, lower than its previous guidance of $6.00 to
$6.10 a share.
Shares of the retailer fell 9.2% in premarket trading.
Since Chief Executive Marvin Ellison took the helm in July, he
has called for vast improvements in the company's inventory,
customer service and work processes. Lowe's is now stocking more
faster-selling items while reducing inventory of lower-performing
ones.
Those steps, along with cost pressure and what Mr. Ellison
called ineffective legacy pricing tools, led to margin compression,
which weighs on profitability. The company's gross margin was
31.46% of sales in the latest quarter, compared with 33.11% a year
earlier.
Earlier this week, Lowe's agreed to buy a retail-analytics
platform from Boomerang Commerce, a move that the company expects
would help bolster its strategic and data-driven pricing and
merchandise assortment decisions.
Lowe's has said it decided to sell the assets of its businesses
in Mexico rather than exit the retail operations as initially
planned. This resulted in a tax benefit of $82 million in the
period, the company said.
Net income for the quarter was $1.05 billion, or $1.31 a share,
up 5.9% from the comparable quarter a year earlier. Its bottom line
benefited from lower expenses and taxes. Analysts polled by
Refinitiv were expecting a profit of $1.31 a share.
Excluding special items, Lowe's said earnings were $1.22 a
share. Analysts had expected $1.33 a share.
Net sales rose 2.2% to $17.74 billion from a year ago. Analysts
estimated revenue of $17.66 billion.
Comparable-store sales -- a common metric in retail based on
revenue at stores open at least one year -- rose 3.5%. Analysts
polled by Consensus Metrix expected a 3.2% rise.
Meanwhile, its home-improvement rival Home Depot Inc. reported
comparable sales rose 2.5% for its latest quarter, below analysts'
estimates.
Write to Kimberly Chin at kimberly.chin@wsj.com
(END) Dow Jones Newswires
May 22, 2019 08:59 ET (12:59 GMT)
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