Disappointing quarter for Lowe’s
It was another disappointing quarter for Mooresville, North Carolina-based Lowe’s Cos., which on Wednesday reported lower-than-expected earnings and gave notice of slower growth in profit margin for the second half.
The home-improvement company reported revenue of $19.5 billion, which was short of estimates, but reflected a 6.8% increase from the same period last year. Lowe's reported net income for the second quarter of $1.4 billion compared to $1.2 billion a year ago. A bright spot for Lowe’s second quarter was that same-store sales, which rose 4.5%, exceeded Wall Street forecasts.
“While our results were below our expectations in the first half of this year, the team remains focused on making the necessary investments to improve the customer experience and drive sales,” said Robert Niblock, CEO. These investments include consumer messaging and what Niblock called “incremental customer-facing hours” in stores.
Lowe’s, which operates 2,141 stores in North America, announced that it would add 25 home improvement and hardware stores this year.
Product categories that performed above average in the second quarter were appliances, lawn & garden, lumber & building materials, and rough plumbing & electrical. Paint, flooring, and seasonal & outdoor living were among the underperformers.
Shares of Lowe’s were down more than 6% in mid-day trading as the company missing both its top and bottom line numbers spooked investors.The news comes a week after Home Depot reported its highest quarterly revenue in company history.
To boost profits and play catch up to Depot, Lowe’s has been investing in its Pro business. It has also restructured parts of the company, including layoffs of more than 120 corporate tech workers this summer.
New home sales sink 9.4%
Sales of new single-family homes fell dramatically in July, according to stats released Wednesday morning by the U.S. Census department.
New home sales declined 9.4% to a seasonally adjusted annual rate of 571,000. That’s below the upwardly revised June rate of 630,000, and also below the year-ago rate of 627,000. The July figures are the lowest since December of 2016, when the SAAR stood at 548,000.
The disappointing data will do nothing to abet concerns over the speed of the housing market’s recovery. The Census data followed by a few days a residential construction report that showed a decline in new residential construction.
Analysts had expected the new sales figures to fall in the 610,000 range.
[See the government release here.]
As sales declined, the median sale price of new houses sold in July increased to $313,700, that’s up from $311,600 in the prior month. The average sales price for a new home was $371,200, which was also up slightly from the previous month.
The August report for new home sales is slated to be released Sept. 26.
Next Big Thing: Walmart and Uber
The nation's largest retailer continues to beef up its defenses against Amazon.
Walmart is expanding its online grocery delivery pilot via Uber to Orlando and Dallas. The pilot is currently ongoing in Phoenix and Tampa, Fla. (The chain also runs its own grocery delivery service in Denver and San Jose, California.) Walmart announced the expansion just days prior to a scheduled vote by Whole Foods Market's shareholders on its pending acquisition by Amazon.
"We’ve been testing delivery in a number of ways for a while now in key markets across the country," said Mike Turner, VP, eCommerce operations, Walmart, in a blog on the company's website. "In some areas, we’re trying general merchandise deliveries led by associates. In others, we’re testing grocery delivery using Walmart trucks and drivers. We’re working hard to find a way to get you fresh, quality groceries all while keeping a little more time on your calendar.
Under the pilot with Uber, after the customer's order is prepared, an Uber driver comes to the appropriate Walmart store, picks up the order and takes it directly to the customer’s location.
In addition its grocery delivery pilots, Walmart offers customers the ability to pick up online grocery orders at some 900 of its stores.