Lowe’s said it expects to keep gaining market share and improving its margins.
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Lowe’s stock is rising, on the heels of an upbeat fiscal fourth-quarter performance. Consumers continued to flock to the home-improvement retailer amid the pandemic and the company hinted that some of that strength could continue.
Lowe’s (LOW) said it earned $978 million, or $1.32 a share, up from 66 cents in the year-earlier period. On an adjusted basis, which strips out one-time items including a restructuring of the company’s Canadian operations, Lowe’s earned $1.33 a share. Revenue rose 26.7% to $20.3 billion. Analysts were looking for EPS of $1.21 and revenue of $19.42 billion.
Comparable sales were up 28.6%, ahead of the 22% Wall Street expected. Online sales soared 121% in the period.
Lowe’s didn’t provide specific forecasts for the current year, but said, as it has before, that it expects “to grow market share and drive further operating margin expansion.” It also reiterated a previous plan for $9 billion of share repurchases and $2 billion in capital expenditures in 2021.
Lowe’s was up 1.9% to $171.85 in early trading. The shares have gained 5% year to date and are up 48.8% in the past 12 months.
There was a lot to like in the quarter. Same-store sales, probably the most-watched metric for Lowe’s, and the one where expectations are highest, easily sailed over the bar analysts set, while the company saw broad-based sales momentum across categories. Management also suggested that the fourth-quarter strength has carried over thus far into the fiscal first quarter.
Of course, rival Home Depot (HD) provided a similarly robust update on Tuesday, and that stock sold off regardless. The difference is that Lowe’s reiterated its outlook for the year, however vague, which was more than Home Depot was willing to do.
It is no surprise that results at both home improvement retailers were stellar in the fourth quarter. An increase of Covid-19 cases in late 2020 and more-transmissible variants meant more lockdowns, while colder weather meant that people were more likely to spend that time indoors, at home. Those conditions remain today.
The real question for investors is how long the companies can maintain their pandemic-era momentum. Bulls argue that there are factors to keep home- improvement demand strong even when the U.S. reaches mass vaccination levels. Lowe’s forecast, light on numbers as it was, was more upbeat than Home Depot’s silence on the subject.
Write to Teresa Rivas at [email protected]
