A shopper visits a Lowe’s hardware store in Philadelphia, Pennsylvania, November 4, 2020.
Mark Makela | Reuters
Lowe’s shares fell Wednesday after the home improvement retailer reported third-quarter earnings and a profit outlook slightly short of estimates, weighed down by higher labor costs and investments in its e-commerce business.
Its same-store sales surged more than 30%, including a doubling of online sales, as the coronavirus pandemic pushed more people to its stores and website to invest in their homes.
But investors largely shrugged off those gains, looking more toward the future and how the retailer will perform after the Covid-19 crisis abates.
“What’s next? I think that’s what the market is really starting to ask here,” Oppenheimer analyst Brian Nagel said. “The market is worried about … how these companies perform against these very difficult comparisons.”
Lowe’s shares were falling more than 7% in premarket trading.
Here’s how the home improvement company did during its fiscal third quarter compared with what analysts were expecting, based on Refinitiv data:
- Earnings per share: $1.98, adjusted, vs. $1.99 expected
- Revenue: $22.31 billion vs. $21.25 billion expected
For the quarter ended Oct. 30, Lowe’s net income fell to $692 million, or 91 cents a share, from $1.05 billion, or $1.36 per share, a year earlier. Excluding a $1.1 billion pretax loss on extinguishment of debt, the company earned $1.98 per share, a penny short of analysts’ estimates, based on Refinitiv data.
Sales rose to $22.31 billion from $17.39 billion a year earlier, beating expectations for $21.25 billion.
Same-store sales, which track sales online and at Lowe’s stores open for at least 12 months, surged 30.1%, topping estimates for 22.8% growth.
Lowe’s said it expects to earn between $1.10 and $1.20 per share during its fiscal fourth quarter, while analysts had been calling for earnings of $1.17 a share. It forecasts same-store sales to grow about 15% to 20%.
Lowe’s said it has spent more than $1.1 billion on Covid-related expenses year to date.
The results from Lowe’s come one day after its larger rival Home Depot reported third-quarter earnings that beat estimates, as consumers continued to focus on home improvement during the coronavirus pandemic and sales surged 24% from a year ago.
As of Tuesday’s market close, Lowe’s shares are up roughly 33% this year. The company has a market cap of $120.8 billion.