Coming off a strong second quarter that exceeded analysts expectations, Lowe's Cos. Inc. expects to continue the momentum in the back half of the year by leveraging Labor Day and fall harvest events, promoting new products, and investing in technology and staffing.
David Denton, executive vice president and CFO, said Aug. 21 in a conference call with analysts that he expects the home improvement sector to continue benefitting from several factors. These include strengthening wage growth, gains in household formation, rising home prices that encourage discretionary projects, and an aging housing base that drives ongoing maintenance and repair spending.
Mooresville, N.C.-based Lowe's expects total sales to increase 2% for the year, while comparable sales are projected to rise about 3%.
The second quarter got a boost from Lowe's capitalizing on seasonal product demand and leveraging Memorial Day, Father's Day and Fourth of July events.
Although unfavorable weather impacted the first part of the second quarter, the company saw improvements in U.S. comparable store sales in May, June and July. News of the positive second quarter sent Lowe's shares 12.3% higher to $109.95 in premarket trading on the New York Stock Exchange.
The company's second quarter also topped same-store sales growth of competitor Home Depot Inc. That company cut its sales guidance for fiscal 2019 and expects the potential U.S. tariffs on Chinese imports to cost the company up to $2 billion.
The second quarter also was buoyed by market share gains in seasonal and outdoor living segments led by double-digit comparable-store sales in pressure washers as well as riding lawnmowers from top brands in riding equipment including Deere & Co. Group, Husqvarna AB and Craftsman.
The better-than-expected earnings come after disappointing first quarter earnings that fell short of Street estimates.
Lowe's is "still recovering" from that disappointing quarter, Denton said. He added that the company is "aggressively implementing" initiatives to improve its business and will maintain an intense focus on retail fundamentals throughout the remainder of this year.
Marvin Ellison, president and CEO of Lowe's, said the company plans to improve the technology foundation of Lowe's.com. It will transition the entire site to Google Cloud by the first quarter of 2020, enabling Lowe's to "redesign the customer experience from search and navigation to checkout," he said.
He also noted that the company plans to add a new global technology center in Charlotte, N.C., that will employ 2,000 technology professionals. The facility is expected to be completed and open in 2021.
Ellison also noted that Lowe's is planning to leverage additional targeted events. These will capitalize on the "fall micro seasons" and continue to drive strong traffic to the Craftsman line of products for tools, storage and lawn equipment.
The company plans to grow its "Pro" line of business while merchandising teams add more key items, including the new Dewalt Cordless Extreme Brushless platform launching this quarter.
