Lowe’s Posts Earnings Beat, Expects Strong Comps to Continue

The second biggest chain of home improvement stores in the U.S., Lowe’s posted strong numbers for its fourth quarter, beating estimates on Wall Street for both its topline and bottom line.

This comes after strong numbers were posted by home Depot, the bigger rival of Lowe’s. Home Depot’s numbers were also better than what had been expected for its fourth quarter.

Expectations were that Lowe’s would also post strong numbers, as the conditions in the market across the U.S. improved during the second six months of 2016.

Lowe’s posted per share earnings for the fourth quarter of 86 cents with revenue ending the quarter at $15.77 billion. Wall Street was expecting per share earnings of 79 cents with revenue reaching $15.38 billion.

This strong result was boosted by sales at same stores that were close to twice the expectation of the market. Lowe’s sales at same stores were up 5.1% when the market was expecting 2.4%.

In comparison, Home Depot posted an increase of 5.8% for its sales at same stores during the same quarter.

The number that is most important in the results released by Lowe’s was its revenue, which was up more than 5% during 2016. That is slightly higher than Home Depot’s 4.6%.

The entire sector of home improvement has done well during 2016, surprisingly due to the retail sector overall having a mixed bag of results. Target and Kroger posted fourth quarter results that were disappointing, as did Starbucks, but Costco and Walmart posted strong numbers.

The news that remains good is that Lowe’s and Home Depot both expect the strong times to continue during 2017, as an increase in home prices keep that sector on a strong high.

The slowdown across the retail sector did not cause a lot of alarm about the overall health of the complete market, but stores specializing in home improvement, proved the market is doing well, with just certain segments not performing as well.

Lowe’s said that the macroeconomic fundamentals were still favorable and were aligned for another strong year of growth in the home improvement industry supported by job gains continuing, growth in income, debt services ratios close to record lows, improved usage of credit and strong balance sheets for consumers.

CEO at Lowe’s Robert Niblock announced through a prepared statement that the company entered well-position in 2017 to capitalize on the favorable backdrop from a macroeconomic standpoint for home improvement through continuing to execute strategies to grow customer reach and to develop more capabilities to support and anticipate all their needs.

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