Lowe’s Sales View Misses as Home Improvement Demand Wanes
(Bloomberg) -- Lowe’s Cos. delivered a revenue outlook that missed analyst estimates and said it expects home improvement demand to slow next year.
The retailer said in a statement that it expects sales of about $94 billion to $97 billion for the year ended in January 2023, short of the $97.9 billion average estimate of analysts surveyed by Bloomberg.
The company had just raised its sales forecast last month but now says the home-improvement pandemic boom is finally waning in the absence of government stimulus checks and as U.S. consumers shift spending to other categories. The shares, which have been trading near record highs, fell less than 1% at 9:43 a.m. in New York.
Chief Financial Officer Dave Denton said during the company’s presentation to investors on Wednesday that the “home improvement sector is likely to contract modestly” in the coming year. Wall Street analysts expect professional spending to outpace do-it-yourself spending going forward. To offset some of that decline, Lowe’s has been investing in products and services for professional contractors such as adding more national brands and revamping its supply chain to facilitate better delivery options.
For next year, the company said it sees comparable sales in a range of down 3% to flat. Lowe’s still expects revenue of about $95 billion in the current fiscal year, compared to the average estimate of $95.7 billion.
Executives expect higher distribution costs from the long-term impact of supply chain disruptions will pressure margins next year. Keith Hughes, an analyst at Truist Securities Inc., said in a note to clients that “just about every supplier” to Lowe’s is raising prices in the second half of 2021 or first half of 2022.
“We are not immune to the pressures in the rising cost environment,” Denton told investors.
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