Lowe's Q2 EPS Beats Expectations, But Slashes FY24 Outlook Amid DIY Sales Slump

Lowe’s Companies, Inc. LOW reported stronger-than-expected second-quarter earnings, but revealed a decline in comparable sales and revised its FY24 outlook downward.

The company reported adjusted earnings per share of $4.10, beating the analyst consensus of $3.99. Quarterly revenues totaled $23.586 billion, missing the street view of $24.013 billion.

Comparable sales for the quarter decreased 5.1% driven by continued pressure in DIY bigger ticket discretionary spending and unfavorable weather adversely impacting sales in seasonal and other outdoor categories, partially offset by positive comparable sales in Pro and online.

“As we look ahead, we are confident that we are making the right long-term investments to take share when the market recovers,” said Marvin R. Ellison, Lowe’s chairman, president and CEO.

As of Aug. 2, Lowe’s operated 1,746 stores, representing 194.9 million square feet of retail selling space.

Also Read: Lowe’s Q2 Earnings Preview: Analysts Stress ‘Critical’ Margin Performance As Investors Focus On Housing Market, Home Repair Trends

During the quarter, the company repurchased approximately 4.4 million shares for $1.0 billion and paid $629 million in dividends. The company exited the quarter with cash and equivalents worth $4.7 billion. Merchandise inventory – net totaled $16.841 billion.

Outlook Lowered: Lowe’s has revised its FY24 outlook, citing lower-than-expected DIY sales and a pressured macroeconomic environment.

The company now projects total sales between $82.7 billion and $83.2 billion, down from the previous range of $84 billion to $85 billion ($84.481 billion estimate).

Comparable sales are expected to decline by 3.5% to 4.0%, a sharper drop than the earlier forecast of a 2% to 3% decline. The adjusted operating margin is estimated to be between 12.4% and 12.5%, slightly reduced from the previous estimate of 12.6% to 12.7%.

Net interest expense is expected to be around $1.4 billion, with an adjusted effective income tax rate of approximately 24.5%, down from 25%.

Adjusted EPS is projected to be between $11.70 and $11.90 (estimate: $12.22), compared to the earlier range of $12.00 to $12.30, while capital expenditures are anticipated to be about $2 billion.

Price Action: LOW shares are trading higher by 0.53% to $244.51 premarket at last check Tuesday.

Photo via Wikimedia Commons

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