On August 20, 2024, Lowe's Companies Inc (LOW, Financial) released its 8-K filing for the second quarter of 2024. Lowe's, the second-largest home improvement retailer in the world, operates more than 1,700 stores in the United States, following the 2023 divestiture of its Canadian locations. The firm's stores offer products and services for home decorating, maintenance, repair, and remodeling, with maintenance and repair accounting for two-thirds of products sold. Lowe's targets retail do-it-yourself (around 75% of sales) and do-it-for-me customers as well as commercial and professional business clients (around 25% of sales).
Performance Overview
Lowe's Companies Inc (LOW, Financial) reported net earnings of $2.4 billion and diluted earnings per share (EPS) of $4.17 for the quarter ended August 2, 2024. This compares to diluted EPS of $4.56 in the second quarter of 2023. The company recognized a $43 million pre-tax gain associated with the 2022 sale of its Canadian retail business, positively impacting second-quarter diluted EPS by $0.07. Excluding this gain, adjusted diluted EPS was $4.10, surpassing the analyst estimate of $4.00.
Revenue and Comparable Sales
Total sales for the quarter were $23.6 billion, falling short of the estimated $24.01 billion and down from $25.0 billion in the prior-year quarter. Comparable sales for the quarter decreased by 5.1%, driven by continued pressure in DIY bigger ticket discretionary spending and unfavorable weather impacting sales in seasonal and other outdoor categories. However, this was partially offset by positive comparable sales in Pro and online segments.
Financial Achievements and Challenges
Despite the challenging macroeconomic backdrop, Lowe's delivered strong operating performance and improved customer service. The company continues to build momentum with its Total Home strategy, reflected by mid-single-digit positive comps with Pro customers this quarter. However, the decline in comparable sales highlights the ongoing challenges in the DIY segment and the impact of external economic factors.
Capital Allocation and Shareholder Value
During the quarter, Lowe's repurchased approximately 4.4 million shares for $1.0 billion and paid $629 million in dividends. The company remains committed to delivering long-term, sustainable shareholder value through a disciplined capital program.
Updated Full Year 2024 Outlook
Based on lower-than-expected DIY sales and a pressured macroeconomic environment, Lowe's updated its outlook for the full year 2024:
| Metric | Updated Outlook | Previous Outlook |
|---|---|---|
| Total Sales | $82.7 to $83.2 billion | $84 to $85 billion |
| Comparable Sales | -3.5% to -4.0% | -2% to -3% |
| Adjusted Operating Margin | 12.4% to 12.5% | 12.6% to 12.7% |
| Adjusted Diluted EPS | $11.70 to $11.90 | $12.00 to $12.30 |
Analysis
Lowe's Companies Inc (LOW, Financial) demonstrated resilience in a challenging economic environment, with its EPS beating analyst estimates despite a revenue miss. The company's focus on Pro customers and online sales provided some offset to the decline in DIY sales. However, the updated full-year outlook reflects the ongoing pressures in the market. Investors will be keen to see how Lowe's navigates these challenges and continues to execute its Total Home strategy.
Explore the complete 8-K earnings release (here) from Lowe's Companies Inc for further details.
