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Lowe's (LOW) Gains on Pro & Online Business Strength Amid Risks
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Lowe's Companies, Inc. (LOW - Free Report) has been witnessing strength in Pro and online businesses despite soft Do-It-Yourself (DIY) discretionary spending and pressures from lumber deflation. In second-quarter fiscal 2023, Lowe’s saw positive comparable sales in Pro and 6.9% comparable sales growth in online business as it continues to improve its omni-channel experience. In the quarter, it witnessed growth in rough plumbing, building materials, paint, seasonal and outdoor living, lawn and garden and hardware product categories.
Management remains focused on investing in omni-channel capabilities to drive growth. LOW has been expanding its Lowes.com assortment to meet its customers' designs and lifestyles. Management has also been enhancing the pickup-in-store experience to streamline processes and advance technology. In the fiscal second quarter, the company launched a new same-day delivery option on lowes.com and its mobile app, powered by OneRail. This new delivery option boosted customers' omnichannel experience, with fast and convenient delivery in a few hours.
During the fiscal second quarter, Lowe’s online comparable sales rose 6.9% and nearly half of such orders were picked up in a store. The company remains committed to enhancing its workforce management tools to align staffing levels with customer demand. Lowe's One Roof Media Network has also been performing well. This is boosting traffic on lowes.com and generating higher results. It has also expanded its merchandising and services team.
LOW also remains committed to rewarding shareholders through dividend payouts and share repurchases. For instance, in the fiscal second quarter, Lowe’s repurchased shares worth $2.2 billion and paid out dividends of $624 million. The company expects to repurchase nearly $12 billion in shares in fiscal 2023. In May 2023, its board of directors raised the quarterly dividend by 5% to $1.10 per share.
Image Source: Zacks Investment Research
In the past six months, this Zacks Rank #3 (Hold) stock has gained 1.3% compared with the industry’s growth of 1.6%.
Despite the positives, the company has been grappling with lumber commodity deflation and macroeconomic pressure affecting DIY consumer discretionary spending. The gross margin was somewhat offset by costs related to the supply-chain network’s expansion. Management continues to project the company’s relevant market to decrease by mid-single digits this year. For fiscal 2023, it still expects revenues to be $87-$89 billion versus $97.1 billion delivered in fiscal 2022. This outlook reflects persistent pressure from DIY discretionary purchases, inflationary pressures and elevated interest rates.
Lowe’s has been investing in wage increases and bonuses. Over the past three years, management has raised the hourly rate for its store associates by 20%. Since 2018, the company has invested above $3 billion in incremental wage and share-based compensation for frontline associates. Any deleverage in SG&A expenses might be an added deterrent.
Abercrombie & Fitch is a leading casual apparel retailer. ANF has a trailing four-quarter earnings surprise of 724.8%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and earnings per share (EPS) suggests growth of 10.4% and 1,644%, respectively, from the year-ago reported figures.
American Eagle Outfitters is a retailer of casual apparel, accessories and footwear. AEO has a trailing four-quarter earnings surprise of 43.2%, on average. The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year sales and EPS suggests growth of 1.3% and 33%, respectively, from the year-ago reported figures.
Builders FirstSource is a leading supplier of building materials, manufactured components and construction services to professional homebuilders. BLDR has a trailing four-quarter earnings surprise of 52.2%, on average. The Zacks Consensus Estimate for BLDR’s 2024 sales indicates growth of 4.7% from the previous year’s reported figure.
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Lowe's (LOW) Gains on Pro & Online Business Strength Amid Risks
Lowe's Companies, Inc. (LOW - Free Report) has been witnessing strength in Pro and online businesses despite soft Do-It-Yourself (DIY) discretionary spending and pressures from lumber deflation. In second-quarter fiscal 2023, Lowe’s saw positive comparable sales in Pro and 6.9% comparable sales growth in online business as it continues to improve its omni-channel experience. In the quarter, it witnessed growth in rough plumbing, building materials, paint, seasonal and outdoor living, lawn and garden and hardware product categories.
Management remains focused on investing in omni-channel capabilities to drive growth. LOW has been expanding its Lowes.com assortment to meet its customers' designs and lifestyles. Management has also been enhancing the pickup-in-store experience to streamline processes and advance technology. In the fiscal second quarter, the company launched a new same-day delivery option on lowes.com and its mobile app, powered by OneRail. This new delivery option boosted customers' omnichannel experience, with fast and convenient delivery in a few hours.
During the fiscal second quarter, Lowe’s online comparable sales rose 6.9% and nearly half of such orders were picked up in a store. The company remains committed to enhancing its workforce management tools to align staffing levels with customer demand. Lowe's One Roof Media Network has also been performing well. This is boosting traffic on lowes.com and generating higher results. It has also expanded its merchandising and services team.
LOW also remains committed to rewarding shareholders through dividend payouts and share repurchases. For instance, in the fiscal second quarter, Lowe’s repurchased shares worth $2.2 billion and paid out dividends of $624 million. The company expects to repurchase nearly $12 billion in shares in fiscal 2023. In May 2023, its board of directors raised the quarterly dividend by 5% to $1.10 per share.
Image Source: Zacks Investment Research
In the past six months, this Zacks Rank #3 (Hold) stock has gained 1.3% compared with the industry’s growth of 1.6%.
Despite the positives, the company has been grappling with lumber commodity deflation and macroeconomic pressure affecting DIY consumer discretionary spending. The gross margin was somewhat offset by costs related to the supply-chain network’s expansion. Management continues to project the company’s relevant market to decrease by mid-single digits this year. For fiscal 2023, it still expects revenues to be $87-$89 billion versus $97.1 billion delivered in fiscal 2022. This outlook reflects persistent pressure from DIY discretionary purchases, inflationary pressures and elevated interest rates.
Lowe’s has been investing in wage increases and bonuses. Over the past three years, management has raised the hourly rate for its store associates by 20%. Since 2018, the company has invested above $3 billion in incremental wage and share-based compensation for frontline associates. Any deleverage in SG&A expenses might be an added deterrent.
Eye These Solid Picks
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , American Eagle Outfitters (AEO - Free Report) and Builders FirstSource, Inc. (BLDR - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Abercrombie & Fitch is a leading casual apparel retailer. ANF has a trailing four-quarter earnings surprise of 724.8%, on average. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and earnings per share (EPS) suggests growth of 10.4% and 1,644%, respectively, from the year-ago reported figures.
American Eagle Outfitters is a retailer of casual apparel, accessories and footwear. AEO has a trailing four-quarter earnings surprise of 43.2%, on average.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year sales and EPS suggests growth of 1.3% and 33%, respectively, from the year-ago reported figures.
Builders FirstSource is a leading supplier of building materials, manufactured components and construction services to professional homebuilders. BLDR has a trailing four-quarter earnings surprise of 52.2%, on average.
The Zacks Consensus Estimate for BLDR’s 2024 sales indicates growth of 4.7% from the previous year’s reported figure.