By Savyata Mishra
(Reuters) -Home improvement retailer Lowe’s Cos forecast a slower-than-expected drop in annual comparable sales on Tuesday, banking on a boost to its current-quarter sales from hurricane-related demand, although big-ticket spending was strained.
The company also beat third-quarter comparable sales and profit estimates, similar to results from bigger rival Home Depot (NYSE:HD), which last week cited higher demand for building materials and paints amid hurricane rebuilding efforts.
Hurricanes Helene and Milton devastated parts of the United States, including Florida and North Carolina, causing extensive damage to homes, bridges, power infrastructure and crops.
“Our results this quarter were modestly better than expected, even excluding storm-related activity, driven by high-single-digit positive comps in Pro, strong online sales and smaller-ticket outdoor DIY projects,” Lowe’s (NYSE:LOW) CEO Marvin Ellison said.
Lowe’s, which generates roughly 75% of sales from the do-it-yourself category, has seen challenging demand as interest rates rose over the last few years, making projects requiring refinancing less appealing.
Meanwhile, its segment catering to builders and contractors, a more professional customer base, saw relative strength owing to storm-recovery efforts in the quarter.
“We find it too early to call an inflection point in underlying home improvement demand yet,” said David Wagner portfolio manager at Aptus Capital Advisors, which holds Lowe’s ETFs.
Lowe’s slightly trimmed its annual adjusted margin forecast to a range of 12.3% to 12.4% from a previous range of 12.4% to 12.5%. Shares of the company were down about 2.5% before the bell.
It reported a 1.1% drop in same-store sales for the quarter ended Nov. 1, better than analysts’ average estimate of a 2.86% decline, according to data compiled by LSEG.
The company earned $2.89 per share on an adjusted basis, beating an estimate of $2.82 per share.
Lowe’s expects same-store sales to be down between 3% and 3.5% in 2024 from its prior forecast of a decline in the range of 3.5% to 4%.