Lowe’s (LOW) Q2 2024 earnings

Lowe's It cut its full-year forecast on Tuesday as the home improvement retailer reported lower quarterly sales and said it expected spending on DIY projects to weaken.

The company said it now expects total full-year sales of $82.7 to $83.2 billion, compared with its previous forecast of $84 billion to $85 billion. The company said it expected comparable sales to fall 3.5% to 4%, compared with its previous forecast of a 2% to 3% decline. Adjusted earnings per share are expected to be approximately $11.70 to $11.90, compared with the previous forecast of $12 to $12.30.

“DIY sales are lower than expected and the macroeconomic environment is under pressure,” Lowe's said in a news release.

Here's how the company's fiscal second-quarter report compared with Wall Street expectations, according to a survey of analysts by London Stock Exchange Group (LSEG):

• Earnings per share: $4.10 vs expected $3.97
• income: US$23.59 billion, expected US$23.91 billion

In the three-month period ended Aug. 2, Lowe's net profit fell to US$2.38 billion, Earnings per share were $4.17, compared with $2.67 billion, or $4.56 per share, in the same period last year.

Lowe's received a $43 million pre-tax gain from the sale of its Canadian retail business in 2022, which boosted its second-quarter earnings. This increased the company's earnings per share by 7 cents in the period. Excluding earnings, the company earned $4.10 per share.

Net sales fell from $24.96 billion the previous year. Lowe's reported its sixth consecutive quarter of year-over-year sales declines.

Comparable sales, an industry measure that strips out one-time factors such as store openings and closings, fell 5.1% as the company said customers engaged in fewer discretionary home projects and adverse weather impacted sales of outdoor and seasonal merchandise. Sale. The company said those declines were partially offset by growth in its online business and sales to home professionals such as contractors and electricians.

Lowe's released its quarterly results and outlook at a time when investors and economists are paying particularly close attention to consumer spending. As the Federal Reserve considers a long-awaited rate cut, recent economic data and corporate earnings have given mixed indicators on the financial health of U.S. households.

Job growth in July was much lower than expected. However, on the other hand, WalmartThe largest U.S. retailer “is not seeing any additional harm to consumer health,” Chief Financial Officer John David Rainey told CNBC. Goldman Sachs also lowered the probability of a recession to 20%.

For home improvement retailers, the pressure may be even greater as mortgage rates rise and borrowing costs rise. Lao's competitor, home depotLast week's earnings and revenue topped Wall Street's quarterly forecasts. However, the company said it expected the second half of the year to be weaker than expected as consumers continue to have a “postponement mentality.”

Home Depot Chief Financial Officer Richard McPhail told CNBC that customers are not only putting off projects because of rising interest rates, but are also feeling “greater uncertainty about the economy,” even though Most of Home Depot's customers own homes and have seen real estate values ​​increase significantly.

Lowe's shares closed at $243.21 on Monday. The company's shares were up about 9% as of Monday's close, lagging the S&P 500's nearly 18% gain.

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