Lowe’s faced market pressure in its third quarter, pointing to slower sales and charges that hit earnings.
In the third quarter ended October 28, Lowe’s Cos. recorded net earnings of $379 million, or 43 cents per diluted share, versus $736 million, or 80 cents per diluted share. Excluding $462 million in one-time charges, Lowe’s adjusted net earnings were $775 million, or 88 cents per diluted share. Adjusted diluted earnings per share missed a Thomson Reuters analyst average estimate of 96 cents.
Charges that impacted the quarter included $290 million resulting from the wind down of Hydrox, a joint venture in which Lowe’s holds a one-third ownership interest along with Woolworths. Hydrox operates Masters Home Improvement stores in Australia. In addition, $96 million in charges were related to a write-off for projects that were canceled as part of an ongoing review; and $76 million related to goodwill and long-lived asset impairments associated with the Orchard Supply Hardware operations as part of a strategic reassessment.
Comparable sales gained 2.7%. Net sales were $15.74 billion versus $14.36 billion in the year-prior quarter.
“Our third quarter operating results were below our expectations due to slower sales in the first two months of the quarter,” said Robert Niblock, Lowe’s chairman, president and CEO. “While we expected moderation in the second half of the year, traffic slowed more than we anticipated in August and September before improving in October, which put pressure on our profitability in the quarter. While we have made progress in driving productivity in recent years, we are in the process of evaluating meaningful incremental opportunities to drive shareholder value while continuing to meet customers’ needs in an omnichannel environment.”
Lowe’s operates 2,119 home improvement and hardware stores in the United States, Canada and Mexico.
