Lowe's Cos Lowe's Cos delivered disappointing earnings results this morning, just one day after larger competitor Home Depot Home Depot beat the Street.
The home improvement retailer reported third quarter net earnings of $499 million, up 26% from the same period last year but below the consensus estimate of $503.5 million. Earnings per share were 47 cents, just below the Street's 48 cent estimate.
Sales were up 7.3% to $13 billion, above the Street's $12.7 billion estimate, however shares opened down 3.7% at $48.59.
Citi analyst Kate McShane noted surprise that the stronger than expected sales results did not translate to an earnings per share beat. The miss, she says, was driven by weaker than expected gross margins, which were 34.58% versus the 34.64% analyst expectations.
Citi maintains a neutral rating in part due to weak same store sales when compared to Home Depot. Lowe's same store sales were up 6.2%. Yesterday Home Depot reported 7.4% same store sales growth.
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CEO Robert Niblock noted that results were bolstered by a recovering home improvement market, mirroring comments about housing market strength in Home Depot's earnings report. Looking ahead Niblock added, "The home improvement industry is poised for persisting growth in the fourth quarter and further acceleration in 2014."
According to the National Association of Realtors existing-home sales were up 6% n October from the same period last year to 5.12 million. Sales however were down 3.2% from September to October.
The company updated its full year guidance. It now forecasts 6% sales growth up from a previous 5% growth outlook. Lowe's also expects same store sales to grow 5%, up from a 4.5% prior outlook. It now forecasts $2.15 in earnings per share, up from $2.10 but below the Street's $2.20 estimate.
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