Lowe's sales miss estimates as short spring hurts

Wed Aug 17, 2016 11:39am EDT
 
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By Sruthi Ramakrishnan

(Reuters) - Home improvement chain Lowe's Cos Inc (LOW.N: Quote) reported a lower-than-expected quarterly profit and cut its full-year earnings forecast, hurt by a shorter spring in the northern United States and fewer big-ticket purchases at its stores.

Lowe's shares were down 6.8 percent in late morning trading on Wednesday.

While Home Depot's sales got a big boost from big-ticket items such as appliances and roofing products, Lowe's reported average sales.

Number of transactions worth over $500 rose 2.9 percent in the second quarter ended July 29, Lowe's said. In contrast, Home Depot reported a 9.5 percent rise in big-ticket purchases worth over $900.

Sales in northern United States were challenged by a short spring, which hindered outdoor projects, Lowe's Chief Customer Officer Mike Jones said on a conference call.

An early spring this year also led to a number of outdoor projects being moved to the first quarter from the traditional second quarter, hurting Lowe's comparable sales, which fell 2.8 percent in May.

Lowe's gets a bigger chunk of its revenue from outdoor business, which benefited from a warmer-than-usual March and April, compared with Home Depot, Edward Jones analyst Robin Diedrich said.

"That has come back to haunt them here in the second quarter," Diedrich added.   Continued...

 
A view of the sign outside the Lowes store in Westminster, Colorado February 26, 2014.   REUTERS/Rick Wilking/File Photo   - RTX2KVFA