Lowe's Cos. Inc. reported better-than-expected EPS and revenue in its second quarter, boosted by strong demand for its products as consumers spent more on home improvement projects amid the COVID-19 pandemic.
The North Carolina-based company reported net earnings of $2.83 billion and diluted EPS of $3.74 for the quarter ended July 31, 2020, compared to net earnings of $1.68 billion and diluted EPS of $2.14 in the second quarter of 2019.
Adjusted diluted EPS of $3.75 was 74% higher than the equivalent $2.15 figure reported in the second quarter of 2019. Analysts had expected the company to report normalized EPS of $2.95 according to consensus estimates compiled by S&P Capital IQ.
Net sales in the latest quarter surged 30.1% to $27.30 billion from $20.99 billion in the year-ago period, ahead of analyst estimates of $24.24 billion. Comparable sales increased 34.2%, while comparable sales for the U.S. home improvement business increased 35.1%.
Operating income rose to $3.96 billion from the $2.38 billion reported in the 2019 quarter.
On Aug. 12, Lowe's said it would expand its supply chain network over the next 18 months.
The home improvement retailer's performance mirrors the better-than-expected second-quarter results posted by rival Home Depot Inc. on Aug. 18. Shares of both companies have risen strongly so far this year. Both companies, however, have withdrawn guidance for the year, citing uncertainty stemming from the continuing pandemic.
In premarket trading on the New York Stock Exchange, Lowe's shares moved up 2.3% to $161.55.
All merchandising divisions posted "comparable sales growth exceeding 20% and all U.S. geographic regions delivering comparable sales growth of at least 30%," Lowe's CEO and President Marvin Ellison said in a statement.
"Sales were driven by a consumer focus on the home, core repair and maintenance activities, and wallet share shift away from other discretionary spending. ... Looking ahead, our sales momentum continues into August," Ellison added.
In the second quarter, the company said it had invested $460 million to support frontline employees and communities and increase store safety. In the first half of the year, such investments had totaled $560 million, in addition to $100 million provided for community pandemic relief.
Lowe's did not provide additional earnings or revenue guidance in its statement.