Lowe’s Cos. reported a strong summer sales pace that beat estimates as housebound Americans in every region did more home improvement while cutting back on other discretionary spending.
Same-store sales in the U.S. rose 35.1%, beating the estimate for a 20.5% gain from Consensus Metrix. Lowe’s adjusted earnings per share for the second quarter ended July 31 of $3.75 also beat the average analyst estimate.
Lowe’s Chief Executive Officer Marvin Ellison said all U.S. geographic areas delivered comparable sales growth of at least 30%, meaning sales grew in even the hardest-hit virus regions as Americans looked for do-it-yourself projects. The momentum has continued into August, with comparable sales so far on par with July’s 28% growth, even as stimulus checks to Americans stopped flowing last month.
Shares rose as much as 3.2% in New York. They had risen 32% year to date through Tuesday and have been trading at record highs.
Lowe’s, like rival retailer Home Depot Inc., has benefited as consumers invest in their homes, where many have been stuck for months, resulting in more wear and tear. Home-improvement retailers, seen as a proxy for the U.S. housing market, also do better when the housing market is strong. U.S. home construction starts increased in July by more than forecast, surging by the most since 2016, according to data released Tuesday.
Lowe’s has been expanding in digital as wary customers prefer to stay home, with sales on its website soaring 135% in the quarter. Faster delivery has been a priority for the company, which said last week it plans to build up its supply chain in order to provide more same-day and next-day service offerings and boost its shipping capabilities over the next 18 months.
In urban markets, Lowe’s saw “strong sales trends,” and comparable sales outperformed more rural areas. Its pro business, which includes sales to trade professionals, saw same-store sales growth in the mid-20s, Ellison said.
On Tuesday, Home Depot reported sales growth that was more than double the already brisk rate analysts had been expecting — but it also called out rising expenses. Lowe’s reported higher selling, general and administrative expenses as well — up 18% — plus $10 million of pretax operating costs related to its previously announced store closings in Canada.
— With assistance by Karen Lin
(Adds additional details from call, shares trading)