Mooresville, North Carolina: Home improvement retailer Lowe’s Cos. reported fourth-quarter revenue of $15.65 billion, falling behind Wall Street expectations of $15.74 billion.
For the three months ended Feb. 3, Lowe’s lost $824 million, or $1.03 per share. A year earlier the Mooresville-based company earned $554 million, or 67 cent per share.
However, tripping out the one-time charges, including a $952 million goodwill impairment charge, earnings came to 80 cents per share. Analysts had projected earnings of 79 cents per share for the quarter.
Comparable store sales increased 1.7 percent, in comparison to 2.4 percent for the home improvement business on national level.
Lowe’s shares opened at $109.01, up $4.02 or 3.83 percent, on Wednesday. Its shares were boosted by earnings that were better than the ones reported by its rival Home Depot Inc. on Tuesday.
The unfavorable weather and slowdown of the housing market were both blamed for inflicting losses on the home improvement sector.
The Commerce Department reported Tuesday that housing starts plunge to the lowest level in more than 2 years, signaling fewer home sales in the near future.
Despite the subpar performance of its earning announcement, Marvin R. Ellison, Lowe’s president and CEO, said that he was still pleased with the progress of the company. Ellison started his job as Lowe’s CEO last year, replacing Robert Niblock.
“Most of the intense work over the past six months to transform our company has been in preparation for an improved spring season and fiscal 2019,” Ellison said. “Therefore, we are encouraged by an improved comparable sales progression through the fourth quarter, culminating in U.S. home improvement comp growth of 5.8 percent in January.”
As of Feb. 1, the company operated 2,015 home improvement and hardware stores in the U.S., Canada and Mexico representing 209.5 million square feet of retail selling space.
The home improvement retailer also forecast 2017 sales of $72.74 billion and earnings of $6 per share to $6.10 per share. Analyst’s estimates of earnings fall in between at $6.04 per share.
Lowe’s Chief Executive Officer Marvin Ellison said the home improvement industry should continue to benefit from higher incomes, lower federal tax rates and rising house prices.
“As home prices are increasing, consumers are staying in their homes longer and because of their improved financial position, they are investing in their homes,” Ellison said on a conference call with analysts.
While Home Depot makes the bulk of its sales from contractors who bill more, Lowe’s sells a wide range of do-it-yourself projects mainly to individual home owners.
The Mooresville, North Carolina-based company is now trying to serve more contractors, and on Wednesday it said results in that business have been positive.
Since Ellison took over in July, Lowe’s has hired thousands of software workers and opened fulfillment centers to boost online sales, while also trying to improve the in-store experience.
“We’re simply servicing an existing customer better, and we’re becoming a second, if not a first option, for customers that literally stopped shopping us because we didn’t have adequate inventory levels,” Ellison said.
Lowe’s U.S. comparable-store sales rose 2.4 percent during the fourth quarter ended Feb. 1, with growth of 5.8 percent in January.
“We like the direction (Lowe’s is) headed,” said Eric Grasse, a vice president at Dillon & Associates which owns shares in both Lowe’s and Home Depot.
Meanwhile, Lowe’s comparable-store sales declined in Canada, where the company now runs less than 300 outlets after closing dozens of unprofitable stores.
“We anticipate weakness in the Canadian housing market, which is exerting pressure on our outlook for that business over the near term,” Ellison said, adding he was confident of Lowe’s long-term potential in Canada.
Overall comparable-store sales rose 1.7 percent, but missed analysts’ average estimate of a 2.03 percent increase, according to IBES data from Refinitiv.
The company reported a loss in the fourth quarter due to the impact of restructuring expenses but excluding one-time items, Lowe’s earned 80 cents per share, beating Wall Street estimates by 1 cent.