(Reuters) – U.S. retail group Lowe’s warned on Wednesday that its annual sales would be hit after reporting an unexpected drop in quarterly sales as demand for tools and paints fell due to inflation and the reopening of offices following confinements linked to the coronavirus pandemic.
Still, the home improvement chain said it expects 2022 earnings per share to be in the upper end of its guidance range of $13.10-13.60 ($12.9-13 .4 euros), thanks to tighter cost control and continued demand from professional builders.
The stock rose about 4% in pre-market trading.
During last year’s lockdowns, Lowe’s benefited from the enthusiasm of customers for renovation projects, but the return to work and higher inflation dampened spending on such projects.
“Our first-half results were disproportionately impacted by our 75% DIY customer base,” said Marvin Ellison, Lowe’s chief executive.
Those declining sales numbers contrast with better-than-expected results from rival Home Depot, which said Tuesday that demand from professionals and DIYers held up in its second quarter.
Lowe’s posted an unexpected 0.3% drop in second-quarter sales, while analysts on average had expected a 2.4% rise, according to IBES data from Refinitiv.
The group forecasts total sales for the full year towards the bottom of its range of $97 billion to $99 billion, and also expects comparable sales to be at the lower end of its previous forecast, i.e. a decrease of 1% to an increase of 1%.
It did, however, post a profit of $4.67 per share in the quarter ended July 29, beating estimates of $4.58, due to lower costs.
(Report Praveen Paramasivam and Deborah Sophia in Bangalore, French version Elena Vardon, edited by Matthieu Protard)
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