Lowe’s Companies Inc. (NYSE: LOW) reported its fourth quarter financial results and missed analysts’ earnings estimates, leading to raising concerns from investors. Shares were down 7 percent after the opening bell on Wednesday.
For the fourth quarter, Lowe’s reported revenue of $15.49 billion, falling 1.8 percent year over year, and beating analysts’ estimates of $15.33 billion. Comparable sales increased 4.1 percent year over year, beating analysts’ estimates of 3.1 percent growth. The company reported an EPS of $0.74, missing analysts’ estimates of $0.87.
Lowe’s benefited heavily in the quarter due to a strong U.S. housing market as more people shift to purchase cheaper permanent homes that require renovations.
Although Lowe’s benefited from the housing market, its competitor, Home Depot pulled in majority of the homeowners, allowing the company to top estimates last week.
Lowe’s also announced that its partnership with Sherwin-Williams will become Lowe’s sole paint brand offered in its stores now.
"We achieved comparable sales growth that exceeded our expectations driven by compelling consumer messaging, strong holiday event performance, and our integrated omni-channel customer experiences," commented Robert Niblock, Lowe's chairman, president and CEO.
For 2018, Lowe’s forecasts net sales to increase by 4 percent and comparable sales by 3.5 percent. The company expects a diluted EPS of $5.40 to $5.50.
"As we enter 2018, we are working diligently to improve execution with a focus on conversion, gross margin, and inventory management.” said Niblock.
Lowe’s has been receiving pressure from investors to keep up with Home Depot as the company begins to trail further behind its competitor.
“Let me be clear that our entire leadership team and board are focused on working together to continue to analyze our performance and business expectations, and we are moving forward with urgency to improve our results,” Chief Executive Officer Robert Niblock said Wednesday on a conference call.