Lowe’s Companies Inc. (NYSE: LOW) reported its second quarter earnings on Wednesday that were short of analysts predictions.
The major home and appliance retailer posted a revenue of $19.5 billion, 6.8 percent increase from $18.3 billion year over year, but fell short of analysts’ predictions of $19.53 billion. The company posted an adjusted EPS of $1.57, 14.6 percent increase from $1.37 year over year, but was also short of analysts’ predictions of $1.61. Same-store sales beat predictions as it increased by 4.6 percent compared to an estimate of 4.3 percent.
"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.
Lowe’s has now lowered its full year guidance now. The company is expecting to earn $4.20 to $4.30 a share, but analysts from Thomson Reuter projected $4.62 per share. Lowe’s still expects revenue to grow approximately 5 percent and comparable sales by 3.5 percent. The company expects to add around 25 home improvement and hardware stores.
"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..
Lowe’s will be increasing its hours open to the public, which will put pressure on its operating margin, Niblock.
“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,” he said.
Lowe’s missed analyst estimates in the first quarter as well. Shares have been slowly going down for the company as it faces competition against giant companies like Home Depot, who beat its second quarter earnings.