Lowe’s Q3 beats Street; ‘prepared’ to respond to possible tariff increase
Lowe’s Companies reported third-quarter earnings and sales that topped analysts' expectations amid strong results for its online and home professional businesses and as customers invested in outdoor do-it-yourself projects.
Net income totaled $1.695 billion, or $2.99 a share, for the quarter ended Nov. 1, down from $1.773 billion, or $3.06 a share, in the year-ago period. Adjusted earnings per share came to $2.89, ahead of the $2.82 analysts had expected. (The company recognized a $54 million pretax gain from the 2022 sale of its Canadian retail business, which raised earnings per share by $0.10).
[READ MORE: Lowe's sells its Canadian retail business]
Sales fell to $20.17 billion from $20.471 billion a year ago. Analysts had expected sales of $19.939 billion.
Same-store sales fell 1.1%, driven by continued softness in DIY bigger-ticket discretionary demand. This was partly offset by hurricane-related sales and positive comparable sales in Pro and online.
“Our results this quarter were modestly better-than-expected, even excluding storm-related activity, driven by high-single-digit positive comps in Pro, strong online sales and smaller-ticket outdoor DIY projects,” stated CEO Marvin R. Ellison.
On the earnings call, CFO Brandon Sink said that, with regard to President-elect Donald Trump’s proposed tariff increases, Lowe’s was preparing internally “for what may be coming from the new administration." He also said the company believes it is “well prepared to respond when and if it does happen.”
“Roughly 40% of our cost of goods sold are sourced outside of the U.S. and that includes both direct imports and national brands through our vendor partners, and as we look at potential impacts, certainly would add product costs, but, you know timing and details remain uncertain at this point,” he told analysts.
Lowe’s updated its guidance and said it now expects full-year adjusted earnings per share of $11.80 to $11.90, compared with its prior guidance of $11.70 to $11.90. It expects sales to range from $83 billion to $83.5 billion, compared with prior guidance of $82.7 billion to $83.2 billion. It expects comparable sales to fall from 3% to 3.5%, slightly better than the 3.5% to 4% drop it previously forecast.
As of Nov. 1, 2024, Lowe's operated 1,747 stores.
