Mooresville-based Lowe’s Cos. reported weaker-than-expected quarterly financial results Wednesday, a sign it continues to trail behind its rival Home Depot in benefiting from Americans’ spending on home-improvement projects.
The strengthening U.S. housing market has provided a lift to retailers like Lowe’s, as rising home values, like those in the Charlotte market, have encouraged more people to spend more on home-improvement projects. CEO Robert Niblock said unfavorable weather and Lowe’s website relaunch were partly to blame for lower second-quarter sales.
“The first quarter was a little stronger than the second, but with what we’re seeing from the consumer, their willingness to continue to invest in the home, having some of those weather impacts behind us, we’re excited about and focused on the second half of the year,” CEO Robert Niblock told the Observer.
For the three months that ended July 29, the retailer reported earnings of $1.17 billion, up from $1.13 billion in the same period a year ago, the retailer said Wednesday.
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On a per-share basis, adjusted earnings were $1.37, below the estimate of Bloomberg-surveyed analysts, who had called for $1.42. Lowe’s shares fell more than 5 percent to $76.88 on Wednesday.
Lowe’s top revenue figures were weaker than expected as well. Sales totaled $18.3 billion, up from $17.4 billion in the second quarter of 2015 but below the Wall Street estimate of $18.4 billion.
Sales at stores open at least one year – a metric analysts follow closely to gauge the health of a retailer – rose 2 percent for the quarter, less than half the 4.2 percent industry analysts had projected, according to FactSet.
On Tuesday, Atlanta-based Home Depot, the world’s biggest home-improvement retailer, reported record second-quarter results, and the company raised its profit expectations for the year as the U.S. housing market continues to warm up. For the three-month period, the retailer made $2.4 billion on sales of $26.5 billion.
Recent figures suggest continued strengthening in the U.S. housing market. On Tuesday, the Commerce Department reported that U.S. home construction rose to a six-month high in July, led by a surge in multi-family building.
Lowe’s said its second quarter results included a loss on foreign currency hedge to account for the company’s acquisition of Rona, a Canadian home-improvement company. That decreased pre-tax earnings by $84 million, Lowe’s said.
Lowe’s operated 2,108 home improvement and hardware stores in the United States, Canada and Mexico as of July 29. Bloomberg News and the AP contributed.