Mooresville-based Lowe’s Companies said Wednesday that its profits rose in the third quarter, buoyed by the improving housing market and a tight lid on expenses.
And Lowe’s CEO Robert Niblock said the home improvement retailer is seeing the benefits of its strategy to increase online sales and marketing, with an improved website, tests of new products such as LowesForPros.com and project ideas pushed directly to customers through social networking sites such as Vine and Pinterest. He said the company has changed its focus dramatically from a decade ago, when it was primarily concerned with selling goods through its network of stores.
“Change is always difficult,” Niblock told the Observer. “... It feels like it’s all starting to come together.”
Profits for the quarter ending Oct. 31 rose 17.3 percent from the same period last year to $585 million. Lowe’s sales were up 5.6 percent, to $13.7 billion. And sales at stores open for a year or more, considered a key measure of a retailer’s health, rose 5.1 percent.
Lowe’s also kept expenses in check, with its selling, general and administrative costs rising only 2 percent during the quarter. Company executives said they were able to avoid significantly increasing in-store hours for workers, allowing the company to reap more profit.
Niblock said he’s optimistic that the falling unemployment rate and a rising housing market will continue to boost home improvement spending. But he said there are still risks, including slow wage growth, a strike at West Coast ports that’s slowing product delivery and persistent “underemployment,” in which people can only get part-time work.
Lowe’s saw the fastest rate of growth in sales over $500, which jumped 9.1 percent during the quarter. Those numbers were boosted by higher appliance sales, as well as outdoor power equipment, which executives said people stocked up on in advance of an anticipated rough winter. Niblock said that while many such sales are still “distressed replacements,” in which people must scramble to replace a broken appliance, the company is seeing more planned purchases and upgrades.
“We are starting to also see consumers increasingly willing to engage,” Niblock said.
Lowe’s is the nation’s second-largest home improvement retailer, with more than 1,800 stores. The company’s largest competitor, Home Depot, on Tuesday also reported a strong quarter, with sales up 5.4 percent and profits up 7 percent.
Lowe’s stock rose more than 6 percent Wednesday, closing at $62.26 a share.