Lowe’s (LOW) 3Q 2022 earnings

from Lowe said on Wednesday that high inflation is not hurting sales as it reported third-quarter earnings that beat Wall Street expectations.

The company also raised its full-year earnings expectations. Shares of Lowe’s rose more than 5% on Wednesday.

Company executives noted Wednesday that they are confident in Lowe’s business despite macroeconomic pressures, seeing customers continue to increase discretionary spending and a good quarter for both the professional and DIY segments. for home improvement.

Lowe’s now expects full-year earnings of $13.65 to $13.80, up from $13.10 to $13.60. The home improvement retailer also lowered the top end of its revenue outlook to about $97 billion to $98 billion for the full year. The previous top was $99 billion. The company had said in August it expected sales to be at the lower end of the range. Lowe’s also lowered its expectation for comparable sales to the same or 1%, compared to earlier this year when it expected it to fall 1% to 1%.

Chief Executive Marvin Ellison said on Wednesday’s earnings call that the company chose to be conservative on its sales outlook.

“There’s a lot that’s unknown. We’re not going to be overly optimistic for no reason,” Ellison said. “We had midterm elections that still frankly weren’t quite decided, aggressive action from the Fed and global geopolitical events happening. We’re appropriately conservative.”

Here’s what Lowe reported Wednesday compared to analyst expectations, based on a survey of analysts by Refinitiv:

  • Earnings per share: $3.27 versus $3.10
  • Revenue: $23.48 billion vs. $23.13 billion

Turnover was 3% higher than in the same period last year.

“We don’t see the negative impact of inflation,” Ellison said in an earlier interview with CNBC on Wednesday, adding that customers have instead spent money to renovate and trade in for better products.

Ellison said the tough housing market and rising interest rates have not impacted Lowe’s customer base, noting that many homeowners in the US are on fixed rates or have paid off their mortgages and are unaffected by the Fed’s hikes. He added that many homeowners have seen an increase in their home equity, leading them to invest and renovate.

“There’s often confusion between home construction and home improvement,” Ellison said.

Customers have shown no slowdown in their discretionary spending due to inflation, indicating strong sales of Halloween decorations and a strong start to the holiday season, executives said.

The company said its revenues were driven by 19% growth in its professional segment and its DIY sales improved. Lowe’s added that sales from its website grew by 12%.

Ellison said on a phone call with investors Wednesday that the third quarter was the best performance for the DIY segment. “That customer segment for us is usually the indicator of the overall health of our business,” Ellison added.

Lowe’s earnings report is due a day later DIY storeEarnings for the third quarter beat analysts’ estimates. On Tuesday, Home Depot said its professional and DIY sales had seen positive growth during the period, adding that professionals said their backlogs remain large.

Home Depot executives had noted on Tuesday that the company was “navigating a unique environment” and could not predict how rising costs and other pressures would affect its customers. The company said that while customer transactions were down, it had higher ticket prices due to inflation.

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