NEW YORK (AP) — Lowe’s Cos., the nation's second-largest home improvement chain behind Home Depot, offered an upbeat annual outlook after reporting strong fiscal fourth-quarter results that showed a still sizzling housing market.
The report, released Wednesday, follows a robust quarterly report from Home Depot.
Home improvement stores have been busy during the pandemic as people working from home took on new projects. Many also moved into new homes with more space for a home office. A high inventory of aging homes has also helped to propel home owners to fix up their houses.
Sales of previously occupied homes rose in January as a surge in buyers with cash and others eager to avoid higher mortgage rates snapped up properties, leaving the number of available houses on the market at a record low.
Existing home sales rose 6.7% last month from December to a seasonally adjusted annual rate of 6.5 million, the National Association of Realtors said Friday. That’s more than the roughly 6.08 million sales that economists had been expecting, according to FactSet.
Well before the pandemic, Lowe's, under the stewardship of its CEO Marvin Ellison, overhauled an antiquated website and increased Lowe’s business with professional customers like electricians and contractors. That helped the company to pivot during the pandemic, when more people were relying on online services. And even as Lowe’s now deals with industrywide supply chain issues and higher costs, it’s using its clout to keep shelves stocked while trying to tame inflation at its stores.
Ellison told The Associated Press on Wednesday that roughly 50% of the average ticket growth in the second half of 2021 came from product inflation. “The customer is willing to pay more if the price is competitive," he said. He said shoppers are also willing to trade up for more innovative products.
Lowe's is also expanding to new areas to keep sales growing. The chain announced in January a partnership with Petco Health and Wellness Company to create pet supply shops under the Petco brand at its stores. The plans call for opening nearly 20 shops in Texas, North Carolina and South Carolina by next month. It's also tapping into the aging baby boomer market; it launched an initiative last year to create a one-stop destination at its stores aimed at seniors who want to stay in their homes.
Lowe's, based in Mooresville, North Carolina, said that it earned $1.21 billion, or $1.78 per share, for the quarter ended Jan. 28. The results beat Wall Street expectations. The average estimate of 12 analysts surveyed by Zacks Investment Research was for earnings of $1.72 per share.
The home improvement retailer posted revenue of $21.34 billion in the period, also surpassing Street forecasts. Nine analysts surveyed by Zacks expected $20.82 billion.
Sales at its established stores rose 5.1%. Sales from “Pro" customers increased 23%.
Lowe’s now expects full-year earnings to be $13.10 to $13.60 per share, with revenue in the range of $97 billion to $99 billion.
Analysts are expecting earnings per share of $12.93 on sales of $97.26 billion for the current year, according to FactSet.
Shares rose more than 3%, or $6.72, to $221.31 in afternoon trading.