Why Home Improvement Retailer Lowe's Shares Are Falling Today

Lowe's Companies Inc LOW shares dropped after it reported third-quarter FY23 earnings and slashed the guidance.

The company reported a third-quarter FY23 sales decline of 12.8% year-on-year to $20.47 billion, missing the analyst consensus estimate of $20.88 billion.

Comparable sales decreased 7.4% due to a decline in DIY discretionary spending.

EPS of $3.06 beat the consensus estimate of $3.03.

Gross profit fell 11.8% Y/Y to $6.9 billion, with a profit margin expanding 36 basis points to 33.66%.

Operating margin was 13.17% versus 3.93% last year, and operating income for the quarter jumped 191.8% to $2.7 billion.

The company held $1.5 billion in cash and equivalents as of November 3, 2023. Operating cash flow for nine months totaled $7.03 billion.

The company repurchased about 7.3 million shares for $1.6 billion and paid $624 million in dividends in the quarter.

Outlook: Lowe's cut its FY23 revenue outlook from $87 billion-$89 billion to $86 billion, against the Street view of $87.55 billion.

LOW slashed FY23 Adjusted EPS guidance from $13.20-$13.60 to $13.00 against the consensus of $13.32.

LOW expects FY23 comparable sales to decline about 5% (previously 2%-4% decline).

Price Action: LOW shares are trading lower by 3.69% at $196.90 in premarket on the last check Tuesday.