Following another disappointing quarterly earnings report Wednesday, Lowe’s said it will be hiring more customer-facing store employees and increasing the hours of others – investments the Mooresville-based home-improvement retailer hopes will enhance the shopper experience.
Strengthening in the overall housing market doesn’t seem to be benefiting Lowe’s the same way it has rival Atlanta-based Home Depot, which last week reported its strongest quarterly sales in company history.
Lowe’s earnings have fallen short of Wall Street expectations four of the last six quarters. Wednesday’s report sent shares plunging over 6 percent, and prompted the company to lower its full-year guidance.
One bright spot for Lowe’s in the last quarter was a 4.5 percent rise in same-store sales, an industry term that refers to sales at stores open for at least one year. The rise was stronger than the 4.3 percent rise that analysts had anticipated – but still lower than the 6.3 percent rise Home Depot reported.
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Lowe’s hopes to ride the wave of stronger shopper traffic with the investment in store-level workers – with a primary focus on weekends and peak traffic times during weekdays, the company says.
“To be fair, the company’s overall results are actually pretty good for retail right now ... but do pale in comparison to Home Depot. Lowe’s should continue to benefit from strong underlying home improvement trends,” RBC Capital Markets analyst Scot Ciccarelli said in a research note Wednesday.
Lowe’s reported earnings Wednesday of $1.42 billion for the period ending Aug. 4, up from $1.17 billion a year ago. Adjusted for one-time gains, earnings were $1.57 a share, below the $1.62 a share that analysts polled by Zacks Investment Research had predicted.
Sales for the second quarter rose to $19.49 billion, up from from $18.26 billion but short of the $19.52 billion analysts surveyed by Zacks expected. Lowe’s said sales were above average for appliances, lawn and garden, lumber and plumbing, and below average for flooring, kitchens and paint, among other items.
To boost profits and catch up to Home Depot, Lowe’s has also been investing in offerings for its growing professional customer base, such as contractors, who tend to spend more than typical DIY customers. Lowe’s has also restructured parts of the company, including layoffs of over 120 corporate tech workers this summer.
“We’ve said all along that productivity is not just about cutting costs. It’s about investing in areas that matter most to the customer,” CEO Robert Niblock said in a call with analysts.
Earlier this month, Home Depot reported sales and earnings that topped Wall Street expectations, thanks to increased sales of big-ticket items like lumber and electric grills. Home Depot has been consistently outperforming Lowe’s, in large part because of its stronger pro business. The AP contributed.