Anticipated Decline in Lowe’s Fiscal Q2 Earnings
Lowe’s Companies, Inc. (NYSE:LOW) is expected to report a decline in its fiscal second-quarter earnings, mirroring the challenges faced by its competitor Home Depot, Inc. (NYSE:HD). The home improvement retailer will release its earnings report before the market opens on Tuesday. Bloomberg consensus data predicts a revenue drop of approximately 4% year over year, bringing it to around $23.9 billion, and a 13% decrease in adjusted earnings per share to $3.97.
Impact of Macroeconomic Factors
Same-store sales for Lowe’s are projected to fall by 4.43%, driven by weaker foot traffic trends (down 0.74%) and reduced average check size (down 3.6%). If these estimates hold, it will mark the seventh consecutive quarter of declining sales for Lowe’s. CEO Marvin Ellison previously attributed the challenges to “uncertainty around interest rate cuts, stubborn inflationary pressures, and a consumer preference for discretionary services and experiences.”
Home Depot’s Performance and Implications
Last week, Home Depot reported another disappointing quarter, with revenue of $43.18 billion falling short of the $43.79 billion estimate. Adjusted earnings per share were $4.67, surpassing expectations of $4.52. However, same-store sales declined by 3.3%, slightly worse than the anticipated 2.39%. This also marked the seventh consecutive quarter of negative sales growth for Home Depot, with U.S. same-store sales down 3.6%. The company updated its fiscal 2024 guidance, projecting total sales growth of 2.5% to 3.5%, but with comparable sales expected to decline between 3% and 4%.
Analysts’ Outlook for Lowe’s
Following Home Depot’s results, Telsey Advisory Group, led by Joe Feldman, revised its Q2 outlook for Lowe’s. The firm expects same-store sales to fall by 4.5%, with revenue at $23.9 billion. Feldman highlighted concerns about a normalizing industry environment post-pandemic, a soft housing market with high mortgage rates, and macroeconomic uncertainties. Despite these challenges, Feldman believes Lowe’s Total Home strategy, aimed at providing a comprehensive range of products for both DIYers and professionals, could benefit the retailer in the long term and help it gain market share.
Comparison to Previous Year’s Performance
For Q2 of this year, Wall Street anticipates the following for Lowe’s, compared to the same period last year:
- Revenue: $23.9 billion (down from $24.96 billion)
- Adjusted Earnings Per Share: $3.97 (down from $4.56)
- Same-Store Sales Growth: -4.43% (compared to -1.60%)
- Foot Traffic: -3.60% (compared to -1.90%)
- Average Ticket Size: -0.74% (compared to +0.30%)
2024 Outlook and Future Prospects
Following its Q1 results, Lowe’s reaffirmed its 2024 outlook, expecting total sales to be between $84 billion and $85 billion. Same-store sales are projected to decline by 2% to 3% year over year. Despite current challenges, Lowe’s strategic initiatives may offer potential for long-term recovery and growth.
Featured Image: Megapixl
Author Faith Yakubu 
