Home improvement retail giant Lowe's (LOW -0.44%) reported third-quarter earnings on Tuesday, Nov. 19, that topped analysts' consensus estimates on top and bottom lines. Adjusted diluted earnings per share (EPS) of $2.89 surpassed expectations of $2.82. Total revenue reached $20.2 billion exceeded estimates but fell 1.5% year over year. However, Lowe's saw a 1.1% decline in comparable sales, largely due to weak DIY demand.
Overall, the quarter presented a mixed picture with strong performances in professional sales and online channels, but continuing challenges in the DIY market.
| Metric | Q3 2024 | Analyst Estimate | Q3 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $2.89 | $2.82 | $2.99 | (3.3%) |
| Revenue | $20.2 billion | $19.94 billion | $20.5 billion | (1.5%) |
| Comparable sales | (1.1%) | N/A | N/A | N/A |
| Net earnings | $1.7 billion | N/A | $1.77 billion | (4.1%) |
Source: Lowe's. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year.
Business Overview and Focus
Lowe's Companies operates as a prominent home improvement retailer, offering a wide range of products ranging from appliances to lumber. Key focus areas include its omnichannel retail strategy, Professional customer penetration, and the expansion of product assortment and installation services. The company aims to provide seamless customer shopping experiences through multiple channels like in-store, online, and contact centers. Pro customers, including tradespeople and property managers, are a significant target due to their loyalty and recurring purchase patterns.
Recent efforts have concentrated on strengthening Lowe's omnichannel presence. This includes offering flexible purchasing and fulfillment options and enhancing digital capability and infrastructure to match changing consumer habits. Expanding services for Pro customers and installing services plays a substantial role in supporting strategic efforts, indicating the importance of catering to complete home project needs.
Quarterly Highlights
Online sales experienced significant growth in Q3, partially offsetting DIY declines in large-ticket projects. Lowe's registered high single-digit growth in sales to professional contractors, reflecting its tailored offerings and effective loyalty programs. These sales channels remain critical due to their higher transaction values and stability.
While outdoor DIY projects showed some positivity, Lowe's acknowledged overall softness in DIY demand, an ongoing challenge intensified by macroeconomic factors. Despite operational improvements, supply chain disruptions and rising costs continued to present hurdles. However, the company remains committed to navigating these challenges with over 120 supply chain facilities. The integration of sales channels and logistics enhancements aims to mitigate these issues.
Lowe's announced a $2.26 billion share repurchase program over the past nine months. Also, the company maintains a strong commitment to sustainability, targeting net-zero emissions by 2050. Investments in clean energy and sustainability programs are intended to drive long-term corporate responsibility and brand loyalty.
Looking Ahead
For the remainder of 2024, Lowe's raised its full-year outlook slightly, expecting full-year sales between $83 billion and $83.5 billion, with adjusted EPS ranging from $11.80 to $11.90 (previously $11.70 to $11.90). Management anticipates some demand boost from storm-related needs in the upcoming quarter. Comparable sales for the full year are expected to be down 3% to 3.5% (compared to previous estimates of -3.5% to -4%). Continued emphasis on the Total Home strategy and technological innovation positions the company to leverage future growth opportunities.
As Lowe's adapts to evolving market conditions, investors should monitor the continuation of its omnichannel expansion, professional segment growth, and advancements in sustainability efforts. Future quarters may reveal the impact of strategic investments as well as the evolving demand dynamics in both the DIY and professional markets.
