Lowe’s posts growth, but not enough for Wall Street

Mooresville, North Carolina-based Lowe’s reported modest second-quarter growth. It also had a message for RONA employees in Canada: welcome to the team.

The home improvement giant Wednesday morning reported sales increase 5.3% to $18.3 billion in the quarter. Net earnings increased 3.7%. Comparable store sales company-wide increased 2.0%, and 1.9% in the U.S.

But the company’s performance fell short of Wall Street expectations of about 4.1% comp-store sales growth. And the comp performance at Lowe’s slipped relative to retail rival Home Depot, which reported its sales performance Tuesday.

Lowe’s President and CEO Robert Niblick was bullish on the second half.

“We delivered solid results for the first half of the year, in line with our expectations," said Robert A. Niblock, Lowe's chairman, president and CEO. "We believe we are well positioned to capitalize on a favorable macroeconomic backdrop for home improvement in the second half of this year as we continue to execute on our strategic priorities to provide better omni-channel experiences, deepen our relationships with professional customers, and drive productivity and profitability.”

Lowe’s by the numbers

Q216 sales: $18.3 billion

Q215 sales: $17.3 billion

Growth: 5.3%

U.S. Comps: positive 1.9%

Q216 net earnings: $1.167 billion

Q215 net earnings: $1.126 billion

Growth: 3.7%

One of the big stories playing out at Lowe’s this year is the acquisition of RONA Inc., the Canadian retailer and distributor, which was acquired officially May 20, 2016.

"We are also very pleased to welcome RONA's talented team into the Lowe's family,” Niblock said.

The acquisition led to a loss on a foreign currency hedge entered into in advance of the deal, the company said, decreasing pre-tax earnings for the second quarter by $84 million.

The acquisition also pushed up the company’s store tally significantly. It now has 2,108 home improvement and hardware stores in the U.S., Canada and Mexico. That’s up from 1,860 at the end of the first quarter. The company expects to increase its store count by 45 during the course of the year.

For the full year, Lowe’s expects comps to increase about 4%.