Lowe’s Forecasts Muted Annual Profit on Uncertain U.S. Economy, Cautious Spending
Lowe’s reported Q4 revenue of $18.6 billion exceeded Wall Street’s expectations of $18.3 billion and adjusted earnings per share of $1.93, surpassing estimates of $1.84.
Lowe’s echoed rival Home Depot’s predicted subdued annual sales and profits, indicating that the downturn in the home improvement sector may persist due to rising interest rates.
The home improvement sector has witnessed a sharp slowdown over the last two years as high mortgage rates, rising home prices, and refinancing costs stifled demand. Lowe’s forecast follows conservative projections from TJX, Walmart, and Home Depot, which analysts said is a signal to keep expectations low.
U.S. consumer confidence deteriorated at its sharpest pace in three-and-a-half years in February, with Americans becoming more worried about the potential economic impact of President Donald Trump’s policies. Trump has promised tax cuts, broad tariffs on imports, and is cracking down on illegal immigration, which could worsen the shortage of skilled labor in the U.S.
Lowe’s cited near-term pressure on do-it-yourself interior projects such as flooring and kitchen and bath remodelling, which make up about 70% of its annual revenue. Despite diversifying their supply chains, home improvement retailers are exposed to tariffs on lumber and metal product imports from Canada and imports of hardware, tools, and other durable products such as appliances and home-related goods from China.
Lowe’s executives said they were prepared for everything and were also watching for other potential policy changes. The company expects full-year 2025 comparable sales to be flat to up 1% compared to analysts’ estimates of a 1.13% rise.
Source: Globe and Mail
Source: Yahoo Finance
Source: Lowes
Home Depot Posts Revenue Beat as Home Improvement Challenges Come Into Focus
Home Depot is forecasting a surprise drop in 2025 profit due to a weak housing market and high interest rates, making US consumers wary of making big expenditures. The company’s outlook comes days after Walmart forecasted current-year sales and profit below estimates, citing caution in navigating an uncertain geopolitical landscape.
Home Depot executives on a post-earnings call said they expected the consumer attitude to remain “healthy” while reiterating that the company can manage any impact from tariffs. The company’s shares rose about 3.4% as comparable sales turned positive after two years of declines.
Home improvement chains have contended with guarded spending on expensive home improvement projects such as kitchen and bath remodels, as borrowing costs remained stubbornly high. Customers have instead been turning to repair and maintenance activities. The company also noted uncertainty on how immigration and tax policies, as well as ongoing federal spending cuts, could impact profits.
Home Depot CEO Edward Decker said that tax policy would be one of the most important issues to Home Depot as a full taxpayer, so he would be very pleased if the corporate rate stays at 21%.
Home Depot posted a 0.8% rise in same-store sales in the fourth quarter, compared with analysts’ average estimate of a 1.87% drop. Customer transactions jumped 7.6% from last year, while the average ticket increased 0.3%, reversing several quarters of decline. Home Depot expects adjusted profit-per-share for fiscal year 2025 to decline about 2%, while Wall Street was projecting 4.6 percent growth in earnings.
Source: Yahoo Finance
Source: HBS Dealer
Source: Globe and Mail
Source: Home Depot
Walmart Profit Forecast Falls Short on Slowing Growth
Walmart has forecast sales and profit for the current year below Wall Street estimates, citing the need for caution in navigating an uncertain geopolitical landscape. The company’s shares, which had risen about 72% in 2024 and hit a record high last week, were down 6.4%. Shares of rival retailer Target lost 1.2%, and Amazon declined 1.6%.
High interest rates and persistent inflation have hampered U.S. consumer spending for two years, while President Donald Trump’s new tariff on Chinese goods and tariffs on products from India, Mexico, and Canada have further cast a shadow over the economy.
Walmart’s Chief Financial Officer John David Rainey said on a post-earnings call that the company is “resilient” and focused on value. The retailer did not include an assumption of new U.S. tariffs in its guidance but said Walmart can manage any new duties well without offering details. Sandal maker Birkenstock and toy maker Hasbro cited the economic impact of tariffs as reasons for issuing muted forecasts.
Walmart’s low prices helped it report strong holiday quarter sales and post-record annual revenue. However, investors focused instead on its disappointing outlook. Brian Mulberry, client portfolio manager at Zacks Investment Management, a Walmart investor, said that Walmart’s lower-than-expected guidance is a warning that U.S. consumer spending is slowing. The labour market is still strong, and if Walmart’s soft guidance is followed by a decline in jobs, it would be a strong signal that economic growth is slowing.
Walmart is among the first major U.S. retailers to shed light on market conditions. Target will report its holiday-quarter results on March 4. Wall Street expects the retailer to post a nearly 1% decline in 2024 sales. Walmart is “concerned about the changes going on in Washington as tariffs increase the cost of goods sold and the consumer pulls back,” said Gerald Sparrow, chief investment officer at Sparrow Capital Management, which owns $4 million in Walmart shares.
Source: Financial Post
Source: Globe and Mail
Source: Bay Stret
Source: Walmart
Loblaw Fourth-Quarter Profit Dips on PC Optimum Charge
Loblaw Companies Ltd. is expecting a significant decline in sales of U.S.-made products due to tariffs, which could make them more expensive. The company’s CEO, Per Bank, stated that consumers are increasingly seeking to buy more Canadian products. However, there is concern about the inflationary pressure that tariffs will cause, pushing up prices for some products.
President and CEO Per Bank said now that tariffs are implemented, grocers will feel the largest impact in the produce aisle, where imported fresh fruits and vegetables from the United States are common. Loblaw should be able to find alternatives for roughly half its U.S. produce suppliers.
Overall, Loblaw buys less than 10% of its stock from the U.S., and alternatives already exist in other categories, such as household cleaning products and cereals. WK Kellogg Co. (KLG-N) is one example of a U.S. supplier that could be affected. Now that tariffs are applied, Loblaw will likely promote its control brands instead of Kellogg’s, as nobody will buy it if it’s 25% more expensive. Loblaw owns President’s Choice cereals, which compete with Kellogg’s brands such as Fruit Loops, Raisin Bran, and Rice Krispies.
Since the beginning of the threat in tariffs, retailers have been seeing a shift in Canadians’ buying habits as they seek out more local products. In the first week of February alone, Loblaw saw a 10-percent increase in purchases of Canadian items in its stores compared to the week before. Loblaw is talking with its current Canadian vendors to source more products from them and looking into new and alternative local vendors.
Concerns about trade tensions have dragged down consumer sentiment in Canada, which has yet to recover from the impact of high interest rates and inflation in recent years. Shoppers have been redeeming loyalty points more frequently as they look for ways to offset higher grocery prices, a trend Loblaw expects to continue. Loblaw has benefited from the increase in discount shopping in recent years, as Canada’s largest grocer already has a higher percentage of discount stores in its network than some competitors do. Last year represented the company’s strongest growth in market share in more than a decade.
In 2024, Loblaw converted 38 of its regular grocery locations to discount banners, in addition to opening new stores. In the year ahead, Loblaw plans to open 80 new grocery and pharmacy locations, 50 of which will be discount grocery stores. Loblaw is also continuing to invest in expanding its health care business, with plans to open 100 new “pharmacy care clinics” in 2025. These services are contributing to same-store sales growth, an important metric that tracks increases in sales not attributable to new store openings.
Source: Globe and Mail
Source: The Star
Source: Financial Post
Source: Loblaw
Loblaw Plans to Open 80 Stores in 2025 as Part of $10-Billion Investment over Five Years
Loblaw plans to open 80 new grocery and pharmacy stores this year, with 50 of them being discount grocers. The company is part of an approximately $10 billion investment over the next five years, including $2.2 billion this year. The plans for 2025 include renovating more than 300 grocery and pharmacy locations and modernizing the company’s supply chain, including the initial opening of an East Gwillimbury, Ontario, distribution center.
Loblaw has been at the forefront of the shift to discount shopping over the past few years as Canadians seek ways to mitigate inflation and higher interest rates. In its 2023 financial year, Loblaw opened 31 new discount stores through conversions or brand-new locations, divided between its No Frills and Quebec-based Maxi banners. It also started testing new store formats last year, opening small No Frills stores and launching a pilot project involving a new banner based on its No Name brand.
Loblaw has spent more than $8 billion on improving and expanding its store network since 2020, with a focus on automation in Canadian grocery stores. The renovations will include adding about 100 new pharmacy care clinics to Shoppers Drug Mart locations, which provide assessment and treatment of certain common ailments.
Retail analyst Bruce Winder believes that demand for discounts is not going away and that it will continue to grow. Loblaw has spent more than $8 billion on improving and expanding its store network since 2020, with a focus on automation.
Source: The Star
Source: Loblaw
Canadian Tire Reports Sales Growth in Fourth Quarter, Misses Revenue Estimates
Canadian Tire Corp. Ltd., one of the country’s largest retailers, has reported a significant decrease in consumer confidence due to the current trade war between Canada and the U.S. The company is now looking into alternatives to shield customers from higher prices as it sources roughly 15% of its goods from U.S. suppliers. The U.S. government has also announced a 25% levy on steel and aluminium imports, including from Canada, set to begin on March 12.
Canadian Tire is not alone in reviewing its U.S. supply chain, with Tim Hortons also looking to switch to Canadian suppliers for some packaging. A larger percentage of Canadian Tire’s products come from Canada than from south of the border, many of which fall under the category of essential goods. It is estimated that it should be possible to find Canadian sources for roughly 25% to 30% of the products the company currently buys from the United States. Other categories, such as auto parts, would likely move to overseas suppliers.
Comparable sales rose by 1.1% in the fourth quarter ended Dec. 28, 2024, compared with the same period the prior year. The holiday period was made more complicated by a shift in timing of the Black Friday sales bonanza, which fell later in the season this year, and by more intense promotions as retailers competed for price-sensitive shoppers. Retailers were also affected by the Canada Post strike, which delayed deliveries of holiday flyers and forced Canadian Tire to “completely replan” the last five weeks of the year.
While retail sales grew, sales of non-essential products fell by 2% at flagship Canadian Tire stores, driven by growth from automotive services and other essential categories. At SportChek, comparable sales rose by 0.4%, helped by demand for hockey equipment, hydration products, and casual footwear. Marks reported demand across categories, including for its industrial apparel, driving comparable sales growth of 1.8%.
Members of Canadian Tire’s loyalty program redeemed 75% more Canadian Tire Money in the quarter than in the same period the prior year. The company’s financial services business reported lower normalized income before income taxes, which fell to $76.9 million in the quarter compared to $87.2 million in the same period the prior year.
Canadian Tire’s total revenue grew by 1.5% in the quarter to $4.5 billion, falling below analysts’ expectations of $4.58 billion. Net income attributable to shareholders jumped to $411.5 million in the fourth quarter, compared with $172.5 million in the same period the prior year.
Source: Globe and Mail
Source: The Star
Source: Canadian Tire
Canadian Tire CEO Says Tariff Threat Has Likely Crushed Budding Consumer Confidence
Canadian Tire Corp. Ltd. has reported that consumer optimism has been mostly erased due to tariff uncertainty. The retail giant’s CEO, Greg Hicks, said that the economy was showing signs of recovery and consumer sentiment was starting to turn around in the fourth quarter. He noted that interest rate cuts have had a positive psychological effect on consumers and that an economic benefit may follow. However, Hicks warned that the tariffs from US President Donald Trump may have turned the tables on the company. Canadian Tire is reviewing its U.S. suppliers and seeking alternatives to protect customers from the inflation pressure these tariffs would deliver.
Chief financial officer Gregory Craig said the company will be tracking economic performance and consumer behaviour over the next 100 days before updating its growth outlook and buying plans for the fall and winter. Tariffs are also clouding Canadian Tire’s ability to identify its margin target, or “North Star,” for the year. Canadian Tire’s year-over-year revenue in the fourth quarter rose 1.5% to $4.5 billion, missing analysts’ expectations of $4.58 billion. Shares were down 3.7% in early trading on the S&P/TSX composite index on Thursday.
Hicks also tapped into some Canadian nationalism during the earnings call, praising the provincial and federal government’s unified response to the unjustified economic assault from their nation’s longest-standing ally. He expressed hope for an effective resolution near term and a plan to build Canadian prosperity in the long term.
Source: Financial Post
Canadian Tire Selling Helly Hansen Activewear Brand for Nearly $1.3-Billion
Canadian Tire Corp. Ltd. has agreed to sell its global outdoor and activewear brand Helly Hansen in a nearly $1.3-billion deal, as the company seeks to reinvest in the Canadian retail business amid market uncertainty.
The Toronto-based retailer announced the deal on February 19th, six years after acquiring the Norway-based clothing line from Ontario Teachers’ Pension Plan for $985-million. The proceeds of the sale will be used to pay down debt, buy back shares, and invest in its retail stores. The funds also provide Canadian Tire with additional flexibility for general corporate purposes, including addressing market uncertainty.
Under Canadian Tire’s leadership, Helly Hansen has significantly increased sales and profits. At the time of the acquisition in 2018, the brand generated $500-million in annual revenue and $50-million in earnings before interest, tax, depreciation and amortization. Last year, Helly Hansen reported $894-million in worldwide revenue and $102-million in EBITDA.
The retailer will continue to stock Helly Hansen products under a new multiyear supply agreement with Kontoor. Helly Hansen was founded by a Norwegian sea captain and his wife in 1877 and has grown under Canadian Tire’s ownership. Kontoor executives see an opportunity to double Helly Hansen’s operating margin, including by taking advantage of the company’s existing global sourcing, logistics, and distribution capabilities. The deal is expected to close by the end of June.
Source: Globe and Mail
Source: The Star
Source: Canadian Tire
Costco Wholesale Corporation Reports January Sales Results
Costco Wholesale Corporation reported a 9.2% increase in January sales figures, reaching $19.51 billion for the four weeks ending February 2, 2025. This represents a 9.2% rise compared to the same period last year. Over the first 22 weeks of their fiscal year, Costco’s net sales climbed 8.2%, totalling $113.55 billion, up from the previous year’s $104.94 billion. The company’s total revenue over the last twelve months reached $258.81 billion, with a steady growth rate of 5.35%.
Comparable sales, which reflect revenues generated from stores or digital channels operating for at least one year, showed notable performance across various regions. In the United States, comparable sales increased by 9.2% over the four-week period and 6.6% over the 22-week period. Canadian stores saw a 5.7% rise for the month and 5.4% over the 22 weeks. Other international locations experienced a 1.1% increase in the four-week span and 3.7% over the longer period. Overall, the total company comparable sales grew by 7.5% for the month and 6.0% for the 22 weeks.
E-commerce continued to be a strong growth driver for Costco, with a 13.6% increase in comparable sales for the month and an impressive 16.6% rise over the 22-week period. When excluding the impacts from changes in gasoline prices and foreign exchange, the e-commerce sales figures were even more robust, showing a 15.2% increase for the month and 17.3% over the 22 weeks.
Source: Costco
Source: Investing.COM
