One day after retailer Home Depot reported record earnings that signaled an improving U.S. housing market, competitor Lowe's Cos. reported weak sales growth at existing stores and second-quarter profit that was short of most expectations.
Lowe's, which has 15 Indianapolis-area stores, cut its profit expectations for the year, sending shares down sharply before the opening bell Wednesday.
For the three months ended July 29, Lowe's Cos. earned $1.17 billion, or $1.31 per share. Adjusted earnings fell a nickel short of analyst expectations, according to a survey by by Zacks Investment Research.
A year earlier the Mooresville, North Carolina, company earned $1.13 billion, or $1.20 per share.
Revenue climbed to $18.26 billion, from $17.35 billion, but that was also short of the $18.72 billion Wall Street was expecting.
Sales at stores open at least a year, a key gauge of a retailer's health, rose 2 percent, less than half of the 4.2 percent industry analysts had projected, according to
A day earlier, rival Home Depot Inc. posted record second-quarter sales and earnings, and raised its profit expectations for the year.
For fiscal 2016, Lowe's now expects earnings of about $4.06 per share with revenue up approximately 10 percent, including an extra week in the fiscal year. Same-store sales are anticipated to climb about 4 percent. Its prior guidance was for earnings of $4.11 per share.
Analysts are looking for full-year earnings of $4.06 per share and expect a same-store sales increase of 4.7 percent, according to FactSet.
Lowe's had 2,108 home improvement and hardware stores in the United States, Canada and Mexico at quarter's end.
Analysts said Lowe’s has been hurt by inferior locations and a relative lack of stores in the Northeast.
The overall environment has been favorable for home-improvement stores because renovation spending is driven by housing prices, and they’ve continued to gain this year.
“We are well positioned to capitalize on a favorable macroeconomic backdrop for home improvement in the second half of this year,” CEO Robert Niblock said in a written statement.