Lowe’s stock drops as home-improvement retailer provides downbeat outlook

Net earnings for the fiscal fourth-quarter to Feb. 2 rose to $1.0 billion, or $1.77 a share, compared with $957 million, or $1.58 a share, in the year-before period.

Excluding nonrecurring items, such as costs related to a Canadian retail business transaction, adjusted earnings per share came in at $2.28, while analysts surveyed by FactSet were modeling $1.68. That marked the biggest EPS beat on a percentage basis in at least five years, according to available FactSet data.

Revenue fell 17% — to $18.6 billion from $22.4 billion — but that was above the FactSet consensus of $18.5 billion. Lowe’s noted that the year-earlier quarter’s figures included about $1.4 billion from an extra week and $958 million from its Canadian retail business.

Gross margin improved to 32.4% from 32.3%.

Comparable sales, or sales from stores open at least one year, fell 6.2%, but that beat the FactSet consensus for a 7% decline.

The company noted that comparable sales for its Pro customer base were flat for the period.

For the new fiscal year that just began, Lowe’s anticipates $84 billion to $85 billion in total sales as well as a 2% to 3% drop in comparable sales, forecasts that reflect “near-term macroeconomic uncertainty.” Analysts were modeling for total sales of $85.4 billion and a comparable sales declined or 1.5%.

Lowe’s also models for full-year EPS of $12 to $12.30, while analysts were looking for $12.68.

Separately, Lowe’s said it spent $404 million to repurchase 1.9 million shares during the fiscal fourth quarter, and spent $6.3 billion on repurchases for the full year. The company also paid out $633 million in dividends in the latest quarter and $2.5 billion for the year.

The stock has climbed 15.8% over the past three months through Monday, while shares of rival Home Depot Inc.
HD,
-0.10%
have run up 19.5% and the S&P 500 index
SPX
has advanced 11.4%.