MOORESVILLE, N.C. (AP) — Lowe's second-quarter profit got a boost from the sales of an Australian joint venture, but its performance was weak by most measures in a vibrant housing market, and its profit outlook for the year was well below the expectations of industry analysts.
Shares fell 5 percent Wednesday in premarket trading.
For the period ended Aug. 4, Lowe's Cos. earned $1.42 billion, or $1.68 per share. A year ago the Mooresville, North Carolina, company earned $1.17 billion, or $1.31 per share.
The current quarter included a $96 million gain related to the sale of its interest in the Australian joint venture.
Earnings, adjusted for one-time gains, were $1.57 per share. That's below the $1.62 per share that analysts polled by Zacks Investment Research predicted.
Revenue rose to $19.5 billion from $18.26 billion. It fell short of the $19.52 billion in revenue analysts surveyed by Zacks expected. It also falls short of the Home Depot earnings reported earlier this month, which showed better than expected results for the second quarter.
“We are pleased with our improved comparable sales performance relative to last quarter, and the strong momentum we built throughout the second quarter culminating in a 7.9% comparable sales increase for the month of July,” commented Robert A. Niblock, Lowe's chairman, president and CEO. “I would like to thank our employees for their passion and commitment to serving customers.
“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. 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,” Niblock added.
Sales at stores open at least a year increased 4.5 percent, one of the few areas that it did a little better than expected, according to FactSet. Comparable-store sales are a key gauge of a retailer's health because the remove the volatility of stores recently opened or closed.
Lowe's doesn't appear to be catching the same housing market tail wind of rival Home Depot Inc. Last week, it dazzled investors with its strongest quarterly sales ever and the richest profit in its history.
Lowe's foresees full-year earnings of $4.20 to $4.30 per share, with sales rising about 5 percent. Analysts anticipate earnings of $4.62 per share, according to a FactSet poll.
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