Lowe’s cuts annual forecasts on weak home improvement demand
Lowe’s has cut its annual profit and sales forecasts, citing concerns about a slim chance of recovery in home improvement demand this year. The US Federal Reserve’s expected interest rate cut earlier this year has kept inflation high, affecting home sales and demand for expensive renovation projects. Lowe’s expects a 3.5% to 4% drop in comparable sales for the full year and adjusted earnings per share of about $11.70 to $11.90, down from about $12.00 to $12.30 it previously forecast.
In an interview with CNBC, CEO Marvin Ellison said consumers are waiting for the Federal Reserve to cut interest rates. He added shoppers also under pressure from the economic backdrop. About 90% of Lowe’s customers are homeowners and most have a fixed 30-year mortgage rate of less than 4%, he said. That explains customers’ hesitance to get a new mortgage or take out a loan for a major home project with higher interest rate, he added.
Home Depot also forecast a decline in annual profit and a bigger drop in annual comparable sales. Unusually warm weather also dented sales for home improvement companies during the typically strong spring season, as consumers put off expensive lawn and garden projects.
Tepid demand for do-it-yourself projects led to a 5.1% drop in second-quarter comparable sales, wider than analysts’ expectation of a 4.11 per cent fall. Lowe’s shares were down marginally in choppy trading, but the company beat analysts’ estimates of adjusted earnings per share, helped by cost control measures and gains in its Pro business.
Both Home Depot and Lowe’s have tried to engage more professional contractors and property managers, as demand from individual customers for plumbing, kitchen cabinets, and roofing works remains weak.
Source: Globe and Mail
Source: CNBC
Source: Lowes
Walmart More Optimistic about 2024 as Bargains Prove a Powerful Lure for the Inflation Weary
Highlights
- Annual adjusted profit per share forecast between $2.35 and $2.43
- Full-year consolidated net sales forecast to grow 3.75%-4.75%, up from 3%-4%
- Average transactions rose 3.6% in second quarter, online sales up 22%
- Quarterly earnings of 67 cents per share beat expectations
- Stock up 8%, hits record high of $74.44
Walmart’s reported strong quarter of sales, topped almost all expectations, with its low prices being a powerful draw for millions struggling with rising costs for housing, groceries, and other items. The world’s largest retailer by sales raised its full-year outlook, and executives said their customers may still be holding out for deals, but they are not seeing any signs of fraying. Evidence of a resilient U.S. consumer is apparent across the entire retail sector.
The U.S. reported that Americans stepped up their retail spending last month in the largest leap in a year and a half, helping ease concerns that a sustained campaign by the U.S. Federal Reserve to cool spending with higher interest rates may have gone too far and damaged the main driver of the U.S. economy, the consumer.
Walmart is among the first major U.S. retailers to report quarterly results and provides a peek into how Americans are feeling about their spending power, which came into question recently after hiring by U.S. employers fell surprisingly hard in July and the unemployment rate rose for the fourth straight month.
Walmart Inc. reported earnings of $4.5-billion, or 56 cents per share, in the three months ended July 31. Adjusted per share earnings were 67 cents, or 2 cents better than Wall Street had expected. Sales rose nearly 4.8% to reach $169.33-billion, also beating expectations. Comparable store sales in the U.S. rose 4.2% in the U.S., compared with 3.8% in the first quarter and 4.4% in the fourth quarter. Global e-commerce sales rose 21 percent, matching the first quarter’s pace. “We have not seen any additional strain on consumer health in our business,” Walmart’s Chief Financial Officer, John David Rainey, said on a post-earnings call, a viewpoint it has maintained for several quarters.
In a potentially encouraging shift, Walmart said sales of discretionary items like clothing were flat to very slightly positive. Americans for two years have maintained a laser-like focus on the essentials, taking a pass on goods that are not absolutely necessary and spending that money instead on groceries and other basics.
Source: Globe and Mail
Source: Reuters
Source: CNBC
Source: Wallmart
Best Buy Lifts Annual Profit Forecast as Tighter Cost Controls Pay Off
Highlights
- Best Buy raised its fiscal-year profit guidance Thursday after exceeding earnings and revenue expectations for the most recent quarter.
- The retailer now expects to see full-year adjusted earnings per share in the range of $6.10 to $6.35, up from a prior range of $5.75 to $6.20.
- Best Buy posted comparable sales growth of 6% in the domestic tablet and computing categories.
Best Buy has raised its annual profit forecast, citing tighter cost controls to offset the impact of steeper discounts and promotions. The electronics retailer’s shares rose 15% after reporting a smaller-than-expected drop in second-quarter comparable sales and beating earnings estimates.
The retailer refreshed its membership program last year and trimmed jobs as part of a restructuring plan to help margins amid softer demand at its stores. Best Buy’s Chief Executive Officer, Corie Barry, believes consumers are seeking value and sales events, as well as willing to spend on high-price-point products when needed or when there is new compelling technology.
The company expects adjusted earnings per share for fiscal year 2025 to be between $6.10 and $6.35, compared with its previous forecast of $5.75 to $6.20. While overall demand remains soft, US shoppers have been upgrading their laptops and tablets during the summer after holding back for several quarters.
Best Buy also benefited from demand for higher-priced artificial intelligence-powered products such as Microsoft’s Copilot+ PCs. The company’s services business logged an 8.5% rise in domestic comparable sales, helping margins. Best Buy’s domestic gross profit rate rose to 23.5% in the second quarter from 23.1% last year.
CEO Corie Barry said the industry is returning to growth, adding that Best Buy’s positioning within the sector is helping the retailer “to capture that growth trajectory.”
Source: Globe and Mail
Source: CNBC
Source: Best Buy
