Lowe’s Sales Trail Estimates Despite Strong Housing Market

(Bloomberg) -- Lowe’s Cos. reported two key sales measures that missed analysts’ estimates last quarter despite a buoyant U.S. housing market.

Revenue amounted to $16 billion in the fourth quarter, which ended Jan. 31, the company said Wednesday. That fell short of the $16.2 billion average of projections, while same-store sales -- a closely watched metric for retailers -- also trailed estimates. The home-improvement retailer also forecast full-year profit that came in below Wall Street’s predictions.

Over the past few months, lower borrowing rates have lured more home buyers, boosting prices. That typically benefits home-improvement retailers, because homeowners often do more renovations when they see their property value’s rise. But that frothy environment wasn’t enough for Lowe’s to hit Wall Street’s sales expectations, which served as another sign that Chief Executive Officer Marvin Ellison’s work is far from done.

Lowe’s shares alternated between losses and gains on Wednesday. The stock, down 1% this year through Tuesday’s close, climbed 30% last year.

Since joining Lowe’s in 2018, Ellison has sold off divisions, closed underperforming locations and revamped operations. That had helped the company close the performance gap with larger rival Home Depot Inc. -- at least until last quarter. Ellison served as a senior executive at Home Depot for more than a decade.

Lowe’s same-store sales rose 2.5% last quarter, compared with the average projection for 3.7% growth, according to Consensus Metrix. Home Depot, which reported results Tuesday, posted a 5.2% increase, surpassing estimates.

Excluding some items, Lowe’s earnings per share of 94 cents beat the average projection of 91 cents.

For this year, the company expects adjusted profit per share of $6.45 to $6.65. Analysts estimated an average of $6.67.

--With assistance from James Paton and Karen Lin.

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editors responsible for this story: Sally Bakewell at sbakewell1@bloomberg.net, Lisa Wolfson, Tony Robinson

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