Disappointing Q2 for Lowe’s; to boost store employee hours
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It was another disappointing quarter for Lowe’s Cos., which on Wednesday reported lower-than-expected adjusted earnings and revenue and gave notice of slower growth in profit margin for the second half.
The home improvement company reported that its revenue rose 6.8% to $19.5 billion for the quarter ended Aug. 4, which was short of estimates. Same-store sales rose 4.5%, exceeding Street forecasts.
Lowe's reported net income of $1.4 billion compared to $1.2 billion a year ago. Adjusted earnings were $1.57 a share for the quarter, missing analysts' estimate of $1.62 a share.
“While our results were below our expectations in the first half of this year, the team remains focused on making the necessary investments to improve the customer experience and drive sales,” said Robert Niblock, CEO. "This includes amplifying our consumer messaging and incremental customer-facing hours in our stores which will put pressure on our operating margin. We believe this is the right strategy to more fully capitalize on strong traffic trends in what we believe is a supportive macroeconomic backdrop for home improvement."
Lowe's spokesperson Colleen Penhall told USA Today that the company planned to "add additional hours of store staffing during peak traffic times."
"To more fully capitalize on our strong traffic trends and ensure we are delivering an excellent customer experience, we are reinvesting in store hours at the customer service associate level," she stated.
Lowe’s, which operates 2,141 stores in North America, announced that it would add 25 home improvement and hardware stores this year.
Product categories that performed above average in the second quarter were appliances, lawn & garden, lumber & building materials, and rough plumbing & electrical. Paint, flooring, and seasonal & outdoor living were among the underperformers.
Shares of Lowe’s were down more than 6% in mid-day trading as the company missing both its top and bottom line numbers spooked investors.The news comes a week after Home Depot reported its highest quarterly revenue in company history.
To boost profits and play catch up to Depot, Lowe’s has been investing in its Pro business. It has also restructured parts of the company, including layoffs of more than 120 corporate tech workers this summer.