Lowe's Companies Inc. (LOW, Financial) shares are up over 8% for the year to date. Shares of the company, which owns a chain of home improvement and appliance stores, are up as more Americans choose to renovate their homes rather than move.
The housing market, which has seen historically low inventory levels, is keeping many would-be sellers out of the market, with analysts suggesting that home improvement expenditures will continue to rise. Homeowners are taking equity out of their homes to fund renovation projects and paying out-of-pocket for smaller items, such as commercial outdoor furniture.
Lowe's also made the announcement in May that it hired Marvin Ellison, J.C. Penney Co. (JCP, Financial) CEO, as its new chief executive. Ellison had been working on a major turnaround for J.C. Penney at the time of his hiring, as the retailer continues to face decreased sales due to higher competition levels.
Ellison's hiring led to Lowe's stock pricing rising rapidly. Ellison has 12 years' experience in the home improvement industry, formerly working for Lowe's main competitor, Home Depot (HD, Financial).
He is credited with restructuring Home Depot's professional customer initiatives as the company's executive vice president of U.S. stores.
Analysts suggest that Ellison has a big opportunity to improve Lowe's sales and help the company better compete with the likes of Home Depot.
Lowe's most recent earnings missed first-quarter sales forecasts. The company also missed same-store sales for the quarter, meaning Ellison will be an important part of the company's immediate turnaround.
The company blamed the lull in sales on the long winter, which kept homeowners indoors and pushing back their renovation projects. Many retailers in the U.S. were hit with lower-than-expected sales as the spring selling season started late.
Home Depot also suffered from missed estimates, with the company blaming the cold weather on same store sales missing the mark for the first time in seven quarters.
Lowe's expects to meet its same-store sales target and profit targets. The company's net income rose to $988 million in the first quarter, with earnings per share of $1.19. Sales rose almost 3% on the quarter to $17.36 billion, with analysts hoping the company's sales would reach $17.46 billion. Lowe's fiscal Q1 2017 earnings were $16.86 billion, or $1.03 adjusted earnings per share, with $602 million in net income
Disclosure: The author has no stakes in the listed equities
