Lowe’s raises sales forecast
Lowe’s showed low single-digit gains in net-sales and comp-store-sales growth for the third-quarter ended Oct. 29.
The company also raised its full-year outlook, and it now anticipates $95 billion, for the year. The Mooresville, N.C. giant previously forecast $92 billion for the year.
Sustained home improvement demand was cited as the basis for the improved outlook.
Total sales increased 2.7% in the third quarter to $22.9 billion, up from $22.3 billion in the prior-year quarter, Lowe's reported. Comparable store sales increased 2.6% in the U.S. That’s a swing into positive territory, but a significant drop from the pandemic-induced run on home improvement spending that swept the nation in 2020.
Lowe’s earnings were released early Wednesday, a day after Home Depot posted sales gains. (See article here.)
CEO Marvin Ellison pointed to two big growth categories: Pro and Lowes.com. In these businesses, sales increased 16% and 25%, respectively, he said.
“We also delivered operating margin expansion by driving productivity through disciplined operational execution and cost management," Ellison said.
Appliances and flooring led the charge at Lowe's stores, contributing to an 11% increase in tickets over $500.
"The strengthening higher ticket categories reflects the continued consumer confidence in their homes as a sound investment," Ellison said.
Emphasis on the pro customer is also paying dividends, the CEO said. Sales to the pro outpaced DIY sales in the third quarter. Ellison said pro growth waw over 16% and over 43% on a 2-year basis. "Over the past two years, we have relentlessly focused on improving the Pro offering in our stores and online with better service levels, deeper inventory quantities, a more intuitive store layout combined with an increased number of pro national brands."
During the earnings call, Executive Vice President of Merchandising Bill Boltz talked about removing "friction" from the buying process. An example: "Following the launch of Lowe's virtual kitchen design and visual search in Q2, we enhanced our omnichannel customer experience with the introduction of our paint visualizer on Lowes.com in the third quarter."
Boltz also commented on the giant retailers ability to navigate global supply chain issues. Being one of the "largest importers in the U.S." allows Lowe's to leverage its its carrier relationships, he said.
He added: "Once the product lands in the U.S., we're able to leverage our growing network of coastal holding facilities so that we can hold the product upstream from our regional distribution centers and bulk distribution centers until it's needed. From there, we can quickly flow the product to the right areas of the country."
For Fiscal 2021, the company expects capital expenditures of up to $2 billion.
As of October 29, 2021, Lowe's operated 1,973 home improvement and hardware stores in the United States and Canada representing 208 million square feet of retail selling space, and it serviced approximately 230 dealer-owned stores.
