A customer pushes a shopping cart towards the entrance of a Lowe’s store in Concord, California, on Tuesday, Feb. 23, 2021.
David Paul Morris | Bloomberg | Getty Images
Lowe’s on Wednesday surpassed quarterly earnings expectations and raised its forecast for the year, as Americans buy, fix up and renovate homes in a tight real estate market.
Shares rose more than 1% in premarket trading, as the home improvement retailer said momentum carried into February.
Aging houses, rising real estate values and generational trends are fueling demand for home projects. Americans — including millennials, the country’s largest generation — have been buying homes and upgrading to bigger ones during the pandemic. That has depleted the supply of available homes and inspired some to hire contractors to redo a bathroom, replace a roof or take on other similar projects.
Those dynamics have lifted sales for Lowe’s and competitor, Home Depot.
Here’s what Lowe’s reported for the quarter ended Jan. 28 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Earnings per share: $1.78 vs. $1.71 expected
- Revenue: $21.34 billion vs. $20.90 billion expected
In the fourth quarter, Lowe’s net income rose to $1.21 billion, or $1.78 per share, from $978 million, or $1.32 per share, a year earlier. The results were above the $1.71 expected by analysts surveyed by Refinitiv.
Sales climbed to $21.34 billion from $20.31 billion last year and outpaced analysts’ expectations of $20.90 billion.
Lowe’s same-store sales in the U.S. increased 5.1% in the fourth quarter. The company said sales from home professionals grew 23% in the three-month period, too. The pros tend to be steadier and more lucrative customers.
Lowe’s has historically drawn about 20% to 25% of its total sales from pros compared with Home Depot, which gets about half of its sales from them. Lowe’s has been chasing pros, however, with a new loyalty program and perks like reserved parking and free air for tires at its stores.
Pro sales are growing for another reason, too. As the omicron variant recedes and schedules get busier again, some people are hiring contractors rather than taking on do-it-yourself projects.
The retailer said it expects earnings per share to range from $13.10 to $13.60 on revenue of $97 billion to $99 billion to in fiscal 2022. It had previously forecast earnings per share of $12.94 on revenue of $97 billion for the year, which is a week longer than fiscal 2021.
It said same-store sales will range from a decline of 1% to an increase of 1% for the full year.
As of Tuesday’s close, Lowe’s shares are up 27% over the past 12 months. Shares closed Tuesday at $214.59, bringing Lowe’s market value to $144.58 billion.
Read the company’s earnings press release here.
This story is developing. Please check back for updates.