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Lowe’s sales climb as home improvement spending stays strong

By
John Kell
John Kell
Contributing Writer and author of CIO Intelligence
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By
John Kell
John Kell
Contributing Writer and author of CIO Intelligence
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November 19, 2014, 8:21 AM ET
Photograph by Alex Wong — Getty Images
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Lowe’s (LOW) reported a 17% jump in third-quarter net earnings as consumers continue to open their wallets at home-improvement stores. Here’s what you need to know about the company’s earnings report.

What you need to know: Lowe’s reported a same-store sales increase of 5.1% in the quarter, better than the 4% growth projected by Wall Street analysts but underperforming the increase that rival Home Depot (HD) posted on Tuesday. Home Depot has beat Lowe’s on the same-store sales metric for years now, though both are performing well as the housing market recovers. The outperformance for Home Depot is notable in the latest period as it indicates hacking headlines that first surfaced in September didn’t drive many away from the retailer’s stores.


Encouragingly, Lowe’s also increased its per-share earnings outlook for the fiscal year. It now sees profit of about $2.68 a share, up 5 cents from the prior view.

The big number: Lowe’s overall sales increased 5.6% to $13.68 billion, while per-share earnings climbed to 59 cents from 47 cents a year ago. Analysts surveyed by Bloomberg had projected a profit of 58 cents on $13.55 billion in revenue.

What you might have missed: Home-improvement retail continues to be a bright spot at a time when many brick-and-mortar peers have lamented poor traffic trends at malls and a tepid response from consumers even as the job market improves. Sales at building material, garden equipment and supplies dealers retailers have risen 4.7% in the first 10 months of the year, according to Commerce Department data, growth that exceeds the overall retail and food services industry.

What’s inspiring consumers to spend more? Well home prices are appreciating and the housing market is continuing its recovery in the U.S. As home values increase, home improvement executives have said that consumers are more willing to spruce up their homes if they see it as a more valuable investment. Home Depot’s executives said they were encouraged by projections of economic growth in 2015, and also see further gains to home prices.

About the Author
By John KellContributing Writer and author of CIO Intelligence

John Kell is a contributing writer for Fortune and author of Fortune’s CIO Intelligence newsletter.

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