Lowe’s Jumps Most Since 2008 as Turnaround Bid Is Back on Track
(Bloomberg) -- Lowe’s Cos. surged the most in more than 10 years as profit from the last quarter topped estimates, signaling management made progress in alleviating cost pressures that surprised investors in May and caused the stock to plunge.
- Excluding some items, second-quarter earnings amounted to $2.15 a share, the company said Wednesday. Analysts on average estimated $2.01. Same-store sales -- a key metric for retailers -- rose 2.3% in the quarter, surpassing estimates for 1.7% growth, according to Consensus Metrix.
- As a means to boost profit margins, Chief Executive Officer Marvin Ellison vowed in May to upgrade systems that track inventory and pricing across Lowe’s stores, and the latest results indicate those efforts are beginning to pay off. He told investors on a conference call that a new price management system will be in place by the end of the year.
- Even with lumber deflation and weather issues in the quarter, all of Lowe’s U.S. regions posted same-store sales growth, Ellison said. Spring demand and growth in paint and the company’s professional business led the gains, he said.
- Lowe’s results come a day after investors gave Home Depot Inc. a pass on mixed results. Lowe’s bigger rival rallied on Tuesday after the company signaled a stronger second half, despite concerns about tariffs and falling lumber prices.
- Brian Yarbrough, an analyst at Edward Jones, said that Lowe’s “turned the narrative around” from the previous quarter. “We expect the company to continue to drive market share gains and double-digit earnings growth moving forward,” he said.
- Lowe’s rose as much as 13% to $110.24 on Wednesday. The shares had gained 6% this year through Tuesday’s close, compared with Home Depot’s 26% advance.
- For more on the results, click here.
- For the company statement, click here.
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