Lowe’s second-quarter profit beats on resilient home repair demand

Aug 19 (Reuters) – Lowe’s beat second-quarter profit and margin estimates on Wednesday, helped by enduring demand for home repairs after winter.

The results come a day after larger rival Home Depot beat quarterly expectations and maintained full-year targets, raising investor expectations for the home-improvement sector.

Shares of Lowe’s rose 4% in early trading, despite the home-improvement retailer missing quarterly sales estimates and cutting back annual forecasts to the lower end of its previous view.

Amid a tight home-improvement market, Lowe’s results are reasonable, said Neil Saunders, managing director of GlobalData.

Continued momentum in its professional customer business — a key growth focus — helped Lowe’s mitigate uneven demand from do-it-yourself (DIY) shoppers. Repair-and-maintenance demand was relatively resilient as homeowners spent on necessary upkeep, despite avoiding larger remodeling.

“Customers continue to be cautious and are prioritizing how they invest in their homes,” CEO Marvin Ellison said in a post-earnings call.

Lowe’s, which earlier expected its comparable sales this year could remain flat or grow up to 2%, now sees no annual growth.

Weak sales led to the guidance cut, but that is unlikely to change the broader view until the housing market recovers, D.A. Davidson analyst Michael Baker said.

“Lowe’s remains a well-run operation and although comparable growth may come in flat this year, this is not down to any major internal stumbles,” Saunders added.

The retailer posted earnings per share of $4.27 for the quarter ended July 31. Analysts on average expected $4.22. Gross margins of $8.58 billion also topped estimates of $8.54 billion, as the company received the usual boost from the spring season.

Sales of $25.96 billion, however, lagged estimates of $26.16 billion, as same-store sales increased 0.2% — below expectations of 0.8% growth.

The company said its outlook now includes tariff refunds recognized in the quarter.

(Reporting by Angela Christy in Bengaluru; Editing by Joyjeet Das)