A Lowe’s store stands in Brooklyn on February 27, 2024 in New York City.

Spencer Platt | Getty Images

Lowe’s topped Wall Street’s quarterly earnings and revenue expectations on Wednesday and said its sales slump should end in the year ahead.

The home improvement retailer said it expects full-year total sales to range from $83.5 billion to $84.5 billion, which on the upper end would be higher than its total revenue of $83.67 billion for fiscal 2024. It said it expects comparable sales to be flat to up 1% year over year and earnings per share to range from approximately $12.15 to $12.40.

A tough housing market

On the company’s earnings call, CEO Marvin Ellison stressed that Lowe’s still faces "a challenging home improvement market." He said high mortgage rates have created "a significant gap between today’s rates for homebuyers and the lower rates many homeowners currently enjoy,." That’s led to a "lock-in effect" that’s kept consumers from buying and selling, he said.

How Lowe’s is trying to grow sales

With that tougher backdrop in mind, Lowe’s has tried to move the needle by investing in its online business, attracting more sales from contractors, electricians and other pros and expanding value-driven offers for homeowners.

Sales of major appliances, a category often driven by purchases after an item gets old or breaks, grew in the quarter compared to the year-ago period, said Bill Boltz, executive vice president of merchandising, on the company’s earnings call. He said Lowe’s has doubled the number of next-day deliveries over the past few years, and it can deliver and install major appliances the next day in almost every U.S. zip code.

Lowe’s strategy

Lowe’s has also launched a new private brand called Lowe’s Essentials with products that cost $10 or less, such as closet hangers, gardening tools and water cans, Boltz said on the earnings call. Those items are on display near the front of stores.

The company has also launched a loyalty program for DIY customers. So far, it’s attracted 30 million members, and they are outspending non-members by nearly 50%, Boltz said on the earnings call.

A look at the competition

Lowe’s competitor, Home Depot, narrowly beat Wall Street’s fourth-quarter estimates on Tuesday and also snapped an eight consecutive quarter losing streak with comparable sales.

Yet Home Depot CFO Richard McPhail said the company doesn’t expect the housing market or mortgage rates to change. Instead, he told CNBC that he thinks consumers will gradually get used to elevated rates as "a new normal."

Conclusion

Lowe’s has faced a challenging home improvement market, but the company is working to position itself for growth. By investing in its online business, attracting more sales from contractors and other pros, and expanding value-driven offers for homeowners, Lowe’s is looking to capitalize on the home improvement recovery.

Frequently Asked Questions

Q: What are Lowe’s expectations for full-year sales?
A: Lowe’s expects full-year total sales to range from $83.5 billion to $84.5 billion.

Q: What are Lowe’s expectations for comparable sales?
A: Lowe’s expects comparable sales to be flat to up 1% year over year.

Q: What are Lowe’s expectations for earnings per share?
A: Lowe’s expects earnings per share to range from approximately $12.15 to $12.40.

Q: How is Lowe’s addressing the challenging home improvement market?
A: Lowe’s is investing in its online business, attracting more sales from contractors and other pros, and expanding value-driven offers for homeowners.

Lucid CEO Peter Rawlinson Steps Down, Marc Winterhoff Takes Over as Interim CEO

Lucid Group, an electric vehicle maker, announced on Tuesday that CEO Peter Rawlinson has stepped down, effective Friday. Rawlinson will serve as a strategic technical advisor to the chairman of the board, stepping aside from his prior roles. Marc Winterhoff, the company’s chief operating officer, has taken over as interim CEO.

Reason for Departure

According to Winterhoff, it was Rawlinson’s decision to resign, citing the need to step aside and pass the baton after 12 years of leading the company. Rawlinson had launched the company’s second product, the Gravity three-row SUV, and felt that it was "finally the right time" to step down. In a statement posted on LinkedIn, Rawlinson did not elaborate further on his decision.

Production Targets and Financials

Lucid also announced that it expects to more than double its vehicle production to 20,000 units in 2025, up from 9,029 vehicles produced in 2024. The company reported a net loss of $636.9 million, or 22 cents per share, on revenue of $234.5 million for the fourth quarter ended December 31.

Analysis and Reaction

Analysts surveyed by LSEG had expected a loss of 25 cents per share on revenue of $214 million. The production target for 2025 is compared with production of 9,029 vehicles and deliveries of 10,241 reported for 2024. Shares of Lucid were about 8% higher in after-hours trading on Tuesday, following the announcement.

What’s Next for Lucid

Lucid’s board has initiated a search to identify a new CEO. Winterhoff did not elaborate on what percentage of the 20,000-unit production target the Gravity SUV will represent. The company will focus on gradually building production of the Gravity SUV during the year.

Frequently Asked Questions

Q: Why did Peter Rawlinson step down as CEO?
A: It was Rawlinson’s decision to step down, citing the need to step aside and pass the baton after 12 years of leading the company.

Q: Who will take over as CEO?
A: Marc Winterhoff, the company’s chief operating officer, will serve as interim CEO.

Q: What are Lucid’s production targets for 2025?
A: Lucid expects to more than double its vehicle production to 20,000 units in 2025.

Q: How did the market react to the news?
A: Shares of Lucid were about 8% higher in after-hours trading following the announcement.

Home Depot Tops Wall Street’s Quarterly Sales Expectations Despite Challenges

Home Depot, the largest home improvement retailer in the United States, reported stronger-than-expected quarterly sales on Tuesday, despite a challenging environment for large remodels and pricier projects.

The company’s total sales for the fiscal fourth quarter exceeded Wall Street’s estimates, with revenue of $39.70 billion compared to the expected $39.16 billion. Earnings per share came in at $3.02, beating the expected $3.01.

Growth Expectations for 2024

Home Depot expects total sales to grow by 2.8% in 2024, with comparable sales, which exclude the impact of one-time factors like store openings and calendar differences, increasing by about 1%. The company projects adjusted earnings per share to decline about 2% compared to the prior year.

Market Performance

Home Depot shares closed on Tuesday at $393.29, up nearly 3%. The company’s stock has fallen about 2% so far this year, trailing the S&P 500’s approximately 2% gains during the same period.

Quarterly Results

In the three-month period that ended February 2, Home Depot’s net income climbed to $3.0 billion, or $3.02 per share, from $2.80 billion, or $2.82 per share, in the year-ago period. Revenue rose 14% from $34.79 billion in the year-ago period.

Comparable sales, a key metric that measures sales at stores open at least a year, increased 0.8% across the company. This marked a turnaround from eight consecutive quarters of declining comparable sales.

Regional Performance

Home Depot saw sales growth in about half of its merchandise categories and 15 of its 19 U.S. geographic regions. The company’s U.S. comparable sales increased 1.3% year over year.

Consumer Behavior

Home Depot’s chief financial officer, Richard McPhail, attributed the growth to broad-based demand, citing customers’ willingness to spend more and visit the company’s stores and website more frequently. He noted that consumers are gradually getting used to higher interest rates and are no longer putting off projects.

Challenges Ahead

McPhail acknowledged that the housing market remains a challenge, with mortgage rates and housing prices continuing to impact consumer demand for larger projects. He emphasized that consumers will eventually adjust to higher interest rates, rather than waiting for them to fall.

Investments and Expansion

Home Depot has focused on expanding its e-commerce business, with online sales rising 9% in the fourth quarter compared to the year-ago period. The company plans to open 13 new stores in 2024, following the opening of 12 new locations in 2023. Home Depot has also made strategic acquisitions, including the purchase of SRS Distribution, a leading supplier to professionals in the roofing, pool, and landscaping businesses.

Conclusion

Despite a challenging environment, Home Depot’s quarterly results reflect the company’s ability to adapt to changing consumer behavior and capitalize on its diversified business model. As the housing market continues to evolve, investors will closely monitor the company’s progress and strategy for growth.

FAQs

Q: What were Home Depot’s quarterly sales results?
A: Home Depot reported revenue of $39.70 billion, exceeding Wall Street’s expectations.

Q: What were Home Depot’s earnings per share?
A: Home Depot’s earnings per share came in at $3.02, beating the expected $3.01.

Q: What are Home Depot’s growth expectations for 2024?
A: The company expects total sales to grow by 2.8%, with comparable sales increasing by about 1%. Adjusted earnings per share are expected to decline about 2% compared to the prior year.