Lowe’s (NYSE:LOW) announced its positive outlook on consumer sentiment after exceeding projections for quarterly earnings and comparable sales. The company managed to navigate a challenging landscape in the home-improvement sector, with consistent spending on minor projects countering a broader slowdown.
In response to decreased demand for high-value items due to a difficult housing market and persistent inflation, home-improvement retailers turned to small-scale repair and maintenance work. This strategic shift helped them maintain stability. Lowe’s observed an encouraging upturn in disposable income among U.S. households over the past quarter, a promising sign for the industry’s future.
Marvin Ellison, CEO of Lowe’s, noted that consumer sentiment has taken a positive turn, especially among Do-It-Yourself customers. He expressed the hope that this positive sentiment would continue to strengthen. The delayed arrival of the spring season played a role in driving demand for products like garden equipment and outdoor supplies during the current quarter, benefiting both Lowe’s and its primary competitor, Home Depot (NYSE:HD), in surpassing quarterly performance expectations.
Ellison confidently predicted that Lowe’s would outperform the home improvement market in the latter half of the year, regardless of the macroeconomic environment. He pointed to robust online sales and growth in the company’s Pro-customer business segment, catering to professional builders, contractors, and handymen. Even though the projects taken on by professional customers were slightly smaller, they maintained a healthy backlog of work.
Lowe’s shares saw a 3.4% rise, reaching $224.90, following the company’s report. The second-quarter same-store sales decline of 1.6% outperformed Refinitiv estimates of a 2.36% drop, bolstering investor confidence. The company also upheld its sales and profit forecasts for 2023. Telsey Advisory Group analyst Joe Feldman acknowledged Lowe’s significant investments in Pro-products, services, and strategies. He noted that these investments were proving successful, contributing to the positive trends seen in the company’s performance.
With second-quarter per-share earnings of $4.56, Lowe’s surpassed expectations, with falling lumber prices and effective cost management playing a key role in driving these impressive results.
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