NEW YORK (AP) — Lowe's Cos. on Wednesday reported weaker-than-expected sales for its fiscal fourth quarter and offered an annual forecast that came below Wall Street expectations.
During a call with analysts, Lowe's CEO Marvin Ellison blamed the sales shortfall on the timing of its marketing campaign that didn't align with the compressed holiday season. It's e-commerce website is also under major renovation. But Lowe's said that it's relaunching its website this spring and said that it is working to update the stores with better signage and other merchandising changes.
Shares in the company based in Mooresville, North Carolina, closed down more than 4% on Wednesday.
The report comes a day after strong results from rival Home Depot, which reported better-than-expected quarterly profits and sales.
The contrasting quarterly performances highlights the increasing competition between Home Depot and Lowe’s, which is in the process of an overhaul under Ellison.
Ellison, a one-time Home Depot executive who took the top job at Lowe’s in mid 2018, is trying to reshape the culture at Lowe’s, which has been a distant second to Home Depot in the sector for a while. Ellison has been focusing on getting Lowe’s back to the fundamentals of retailing, like making sure the right items are in stock and improving customer service.
“Though we are only one year into a multiyear plan, we made significant progress transforming our company and believe we are well positioned to capitalize on solid demand in a healthy home improvement market,” Ellison said in a statement.
Ellison told analysts on the call that Lowe's is rolling out new signage in its stores, the first time it changed its signing in 15 years. It's also creating dedicated areas for seasonal merchandise like Halloween to make it easier for customers to shop.
As for the website overhaul, customers will be able to check out with one click. They will also be able to shop by collection. For example, in the past, shoppers buying patio furniture would have to shop on one screen for their table and another for the chairs, Ellison said.
Lowe's reported fiscal fourth-quarter net income of $509 million, after reporting a loss in the same period a year earlier.
The company said it had profit of 66 cents per share. Earnings, adjusted for non-recurring costs, came to 94 cents per share.
The results beat the average Wall Street estimate of 91 cents per share, based on an analyst survey by Zacks Investment Research.
The home improvement retailer posted revenue of $16.03 billion in the period, missing Street forecasts. Ten analysts surveyed by Zacks expected $16.15 billion.
Overall, sales at stores opened at least a year rose 2.5% for the quarter. The figure for the U.S. home improvement business increased 2.6%. Analysts were expecting 3.2% for the quarter, according to FactSet.
Lowe's that online sales was up 3% in the quarter but Lowe's expects high single-digit percentage growth during the second half of the fiscal year.
In comparison, sales at Home Depot stores open at least a year rose 5.2%, which was also better than analysts had expected. Those sales climbed 5.3% in the U.S.
Lowe's expects full-year earnings in the range of $6.45 to $6.65 per share. That's below the Street $6.67 per share estimate, according to FactSet.
Shares of Lowe's fell $5.22 to close at $113.30 Wednesday.