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Lowe’s delivers on sales, but falls short on profit

The fourth quarter produces mixed results for the nation’s second largest home improvement chain.

Lowe's reported fourth quarter net sales of $15.5 billion, which was better than Wall Street expectations for $15.33 billion, down from $15.8 billion in last year's quarter, which benefited from an extra week. Comparable-store sales for the U.S. home improvement business increased 3.7% for the quarter.

Lowe's net income dropped to $554 million, or 67 cents a share, compared with $663 million, or 74 cents per share, in the year ago period. Excluding one-time items, Lowe's earned 74 cents a share, which was 13 cents short of analysts' expectations.

“We achieved comparable sales growth that exceeded our expectations driven by compelling consumer messaging, strong holiday event performance, and our integrated omnichannel customer experiences," commented Robert A. Niblock, Lowe's chairman, president and CEO.

For the full fiscal year 2017, Lowe's net earnings were $3.4 billion, compared to net earnings of $3.1 billion in the 53-week of fiscal 2016. Sales for the full year were $68.6 billion, compared to $65.0 billion in the previous year. Comparable sales for the U.S. home improvement market were up 3.9% for the full year.

At the end of the fiscal year -- Feb. 2, 2018 -- Lowe's operated 2,152 home improvement and hardware stores in the U.S., Canada and Mexcio. Those stores translate into 214.9 million square feet of retail selling space.

"As we enter 2018, we are working diligently to improve execution with a focus on conversion, gross margin, and inventory management,” Niblock said. “Given the rapidly evolving competitive landscape, we are also accelerating our strategic investments leveraging the benefits of tax reform. We continue to build the capabilities required to deliver simple and seamless experiences and strengthen our position as the omnichannel project authority," Niblock added.

Also on Wednesday morning, the company announced an expanded partnership with Sherwin-Williams. Lowe’s said it will become the only nationwide home center to offer the stain brands Minwax, Cabot and Thompson’s Water Seal; as well as paintbrush brand Purdy and spray paint Krylon. In other words, these brands will not be available at Home Depot, the nation’s other “nationwide home center.”

Lowe's earnings report comes about a week after Home Depot reported U.S. same-store sales growth of 7.2%. It was the seventh straight quarter in which Lowe's was outperformed by its rival in this metric.
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