Lowe’s Cos. reported a better-than-expected quarter, helped by a big uptick in sales from its home professional customer (“Pro”) base.
In April, Lowe’s announced it was rolling out an in-store shopping experience created specifically its Pro customer. The initiative, which includes a wide array of new offerings, starting with a dedicated area, called The Pro Zone, appears to be paying off, with the home improvement retailer posting 21% second-quarter growth in its Pro business.
Net income rose to $3.02 billion, or $4.25 a share, in the quarter ended July 30, from $2.83 billion, or $3.74 a share, in the year-ago period. Analysts had forecast earnings per share of $4.01.
Sales rose 1.0%, to $27.57 billion from $27.30 billion, Analysts had expected sales to decline, to $26.74 billion.
Lowe’s online sales grew 7%, on top of 135% growth last year. The chain’s U.S. same-store sales were down 2.2%, but were still better than the 2.6% decline analysts had forecast. (Lowe’s U.S. sales comps were up 32% on a two-year basis.)
Similar to many other retailers, Lowe’s is coming up against hard-to-beat comps from last year when consumers were focused on home improvement projects. In recent months, however, some spending has started to shift to entertainment, vacations, restaurants and services.
Rival Home Depot also fell short of comp sales expectations in its most recent second quarter.
“In the quarter, we drove 21% growth in Pro, 10% growth in installation services and strong comps across décor product categories,” said Marvin R. Ellison, Lowe's chairman, president and CEO. “We also delivered significant operating margin expansion through our disciplined focus on driving productivity across the company. Looking forward, I am confident in the positive outlook for our industry, and our ability to drive operating margin expansion and market share gains."
For the sixth consecutive quarter, 100% of Lowe's stores earned a “Winning Together” profit-sharing bonus, resulting in an expected total payout of $91 million to front-line hourly associates. This payment is $20 million above the target level.
Lowe’s said it now expects to report $92 billion in revenue this year, up from a prior forecast of $86 billion.
As of July 30, 2021, Lowe's operated 1,973 home improvement and hardware stores in the United States and Canada representing 208 million sq. ft. of retail selling space, and it serviced approximately 230 dealer-owned stores.