In anticipation that professional demand will compensate for slowing sales in the do-it-yourself category, Lowe’s (LOW) raised its full year sales guidance to a level above Wall Street’s expectations, offsetting mixed third quarter results and driving shares higher in Wednesday’s premarket trading.
“With the closing of the [Foundation Building Materials] acquisition last month, we look forward to enhancing our offering to Pro customers and creating more sustainable, long-term sales and profit expansion for the company,” said Marvin Ellison, Lowe’s chairman, president and CEO.
The company now sees FY25 sales at $86.0B versus earlier guidance of $84.5B to $85.5B and exceeding $85.66B estimates.
However, the rest of the outlook is more subdued. Management now expects comparable-store sales to be flat, down from prior guidance of flat to up 1% and below the +0.32% consensus. Adjusted operating margin was also cut to 12.1% from 12.2%–12.3%, missing the 12.2% estimate.
The company’s profit is now expected to be approximately $12.25 per share from an earlier range of $12.20 to $12.45 per share, and 2 cents less than anticipated.
These estimates include the “ongoing uncertainty in the macroeconomic environment and expectations for FBM.”
Similar to rival Home Depot (HD) – which also issued cautious guidance for FY25 — Lowe’s reported mixed results for the third quarter. Both reported a very modest increase in sales with Lowe’s 3.2% increase falling short of estimates by $30M. Unlike Home Depot (HD), Lowe’s (LOW) profitability improved with adjusted earnings of $3.06 up 5.9% year-over-year and 11 cents better than expected.
Comparable store sales at Lowe’s (LOW) were up just 0.4% — versus +1.02% estimates — driven by continued growth in its Pro segment, while Home Depot’s (HD) comparable store sales were up just 0.2%, also attributing the majority of the boost to professional sales.
The boost in Lowe’s (LOW) shares is also giving a lift to Home Depot (HD), currently up nearly 1% in Wednesday’s premarket after closing with a loss of 6% on Tuesday.