Lowe’s Hits Record High Amid Raised Forecast, Canada Overhaul

(Bloomberg) -- Lowe’s Cos. raised its earnings outlook for the year and said it plans to reorganize in Canada, even as the home-improvement chain reported third-quarter sales that trailed analysts’ estimates. The shares rose to a record high on Wednesday.

• Excluding some items, profit per share will be between $5.63 to $5.70 for the fiscal year ending in January, the company said Wednesday. That’s above an earlier estimate of as much as $5.65. Same-store sales increased 2.2%, missing projections for 3.2% growth. The company also said it plans to shut 34 underperforming stores in Canada.

Key Insights

• The forecast and store-closing plans show that Lowe’s is pushing hard to get back on track. Rival Home Depot Inc. disappointed investors earlier this week. Chief Executive Officer Marvin Ellison also told analysts on a conference call that the company is “still committed to Canada.”
• The company said the revamping of its web business will slow online growth in the short term. In this quarter, the company expects same-store sales to grow about 3% and the web business will contribute almost nothing to that.
• Lowe’s is often compared to Home Depot, and for many years it struggled to keep pace. That had changed this year, with Lowe’s at times posting better sales results.
• Gains in home prices accelerated in the quarter, boosted by a decline in borrowing costs. That usually means home-improvement spending picks up because more people see their properties as investments.

Market Reaction

• Lowe’s shares surged as much as 6.9%, the most in three months, to $121.22 on Wednesday. The shares had gained 23% this year through Tuesday’s close, compared with Home Depot’s 31% advance.

Get More

• For more on the results, click here.
• For the company statement, click here.

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

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Lisa Wolfson, Marthe Fourcade

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