Lowe’s (LOW, Financial) released its fourth-quarter results on Feb. 26 before the market opened. The company’s earnings beat expectations as a result of the continuous cost-sutting measures, coupled with better customer traffic at physical stores. Revenue, however, did not live up to expectations.
Snapshot of the quarter
The home improvement retailer posted adjusted earnings of 94 cents per share versus the antipated 91 cents per share. Revenue of $16.03 billion fell short of expectations of $16.15 billion.
Comparable store sales were up 2.5% in the reported quarter, which was below the projected growth of 3.6%.
Reflecting on the company’s performace, the company’s president and CEO, Marvin R. Ellison, commented:
"In the fourth quarter, we delivered profitability that exceeded our expectations given strong expense management, improving gross margin and enhanced process execution. Our sales growth was driven almost entirely by our U.S. brick and mortar stores, supported by our investments in technology, store environment and the Pro business. We have a detailed road map in place to modernize our e-commerce platform and accelerate Lowes.com sales, which combined with the sales productivity improvement in our physical stores, underscores our opportunity to unlock additional growth."
Efforts for improvement
The company is currently in the process of a transformation plan under Ellison, who took the helm as CEO in 2018. The transformation focusses on the expansion of the e-commerce business, since almost all of the company’s revenue currently comes from the brick-and-mortar stores. As compared to its rival Home Depot (HD), Lowe’s lags behind in the home improvement e-commerce space.
In addition, Lowe's is looking to widen its base of professional homebuilders and contractors, a key focus that helps differentiate it from competitors.
The company is also putting in efforts to speed up the process of appliance deliveries, which is the company’s core area of operations.
Lowe’s has plans to employ more than 53,000 people to handle the spring rush. Spring is the busiest period for the company, as home improvement projects are most popular during the season.
Financial forecast
Lowe’s has provided fiscal 2020 guidance. The company projects adjusted earnings to be between $6.45 and $6.65 per share for the year, and it expects sales growth to fall within the range of 2.5% to 3%. Comps growth is anticipated to be around 3% to 3.5%.
Disclosure: I do not hold any positions in the stocks mentioned.
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