(Reuters) -Lowe’s Cos joined rival Home Depot in projecting muted annual profit and sales, in a year marked by Americans delaying spending on big-ticket home renovations due to economic uncertainty and stubborn inflation.
The bleak forecast comes as households juggle rising costs for everything from groceries and auto insurance to healthcare, alongside higher borrowing costs and a cooling labor market.
That has dulled an expected lift to demand from easing mortgage rates following the U.S. Federal Reserve’s interest rate cuts.
Lowe’s shares, which fell on Tuesday following Home Depot’s dour report, rose 5% in premarket trading on Wednesday as the company beat quarterly profit estimates.
It earned $3.06 per share on an adjusted basis, compared with analysts’ average estimate of $2.97.
Lowe’s has spent billions this year to buy Foundation Building Materials and Artisan Design Group to strengthen its draw among professional contractors, mirroring a strategy also pursued by Home Depot. Lowe’s trimmed its annual adjusted earnings per share forecast to about $12.25, compared with its prior target of $12.20 to $12.45.
It now expects comparable sales to be flat year-on-year compared with the flat to up 1% range it forecast in August.
However, CEO Marvin Ellison said November sales were positive year-on-year, even as the absence of major storms was weighing on demand. Same-store sales rose 0.4% in the quarter ended October 31, compared with analysts’ average estimate of a 1% growth, according to data compiled by LSEG.
(Reporting by Savyata Mishra in Bengaluru; Editing by Sriraj Kalluvila)
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