Lowe’s (NYSE: LOW) has announced its second-quarter results, revealing a smaller-than-expected decline in gross profit. The company remains optimistic about its annual financial outlook, supported by a boost in online sales that helped counterbalance reduced demand for nonessential products.
Similar to its competitor Home Depot (NYSE: HD), Lowe’s has experienced a slowdown in spending on major home improvement items due to post-pandemic effects and inflation impacts. However, this decline has been offset to some extent by increased expenditures on more affordable maintenance projects. Additionally, the U.S. housing market is gradually returning to normalcy, evident from a 12.2% rise in new home sales in May.
Although gross income decreased by 8% in the quarter ending on August 4, reaching $8.40 billion, the figure surpassed Bloomberg’s consensus estimate of $8.34 billion, partly attributed to cost reductions. Diluted income per share dropped from $4.67 in the same period last year to $4.56. Furthermore, net sales saw a decline of 9.2%, totaling $24.96 billion.
Lowe’s is maintaining its previously adjusted 2023 financial outlook following a “spring recovery” characterized by an expansion in online sales. Unfavorable early spring weather led to a shift of strong sales for lawn care and outdoor supplies into the second quarter. The company anticipates full-year adjusted earnings per share within the range of $13.20 to $13.60, with total sales expected to be around $87 billion to $89 billion.
Lowe’s stock experienced an increase in premarket trading on Tuesday. Despite having lowered its full-year sales and earnings projections earlier in the year, CEO Marvin Ellison expressed confidence in the company’s medium- and long-term prospects. This is attributed in part to more customers opting to invest in repairs for the aging U.S. housing market.