Lowe’s Companies Inc (NYSE: LOW) opened about 3.0% up in the stock market this morning after reporting strong results for its fiscal third quarter that prompted it to raise its full-year guidance.
CEO Ellison discusses earnings on CNBC’s ‘Squawk Box’
On CNBC’s “Squawk Box”, Lowe’s CEO Marvin Ellison confirmed that demand for home improvement was keeping strong, despite many expecting it to take a hit now that the pandemic restrictions have been lifted.
Demand continues to stay strong. We did a pulse survey of our professional customers, and they told us their backlog of projects is as robust as they’ve seen in many years, with the pipeline of projects going all the way through 2022. So, for us, it’s about executing well to meet that demand.
Also on Wednesday, Lowe’s partnered with AARP to launch “Livable Home” – a one-stop destination for people with mobility challenges to redesign their homes.
According to CEO Ellison, lumbar inflation was more of a concern in the prior quarter since prices in Q3 actually came down. Macro trends, he added, are also positive for future growth.
A true shortage of available homes, home price appreciation, historically low mortgage rates, increase in disposable personal income, and over 50% of U.S. housing stock being more than 40 years old, all of that creates a very positive and proactive backdrop for home improvement.
Important points in Lowe’s Q3 earnings report
Lowe’s net income came in at $1.90 billion – a massive increase from $692 million in the same quarter last year. On a per-share basis, it earned $2.73 versus the year-ago figure of 91 cents, as per the earnings press release.
The home improvement retailer generated $22.92 billion in sales, representing a YoY growth of 2.7%. According to FactSet, experts had forecast $2.35 of EPS on $22.08 billion in sales.
U.S. same-store sales were up 2.6% to fuel a 2.2% increase in overall comparable sales – both significantly above estimates. Gross margin improved from 32.7% to 33.1% despite a 2.1% increase in the cost of sales.
For the full year, Lowe’s now forecasts roughly $95 billion in revenue versus $92 billion it had predicted in August. The North Carolina-based retailer bought back $2.9 billion worth of its stock in Q3 and expects another $3.0 billion in share repurchase this quarter. Gross margin is also likely to climb slightly.
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