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Lowe’s CEO says he saw customers ‘trading up’ in fiscal Q3

lowe's ceo on q3 earnings report

Lowe’s Companies Inc (NYSE: LOW), on Wednesday, reported better-than-expected results for its fiscal third quarter as home improvement remained in demand despite fears of an economic slowdown. Shares are up 5.0% this morning.

Highlights from CEO’s interview with CNBC

The dividend stock is up also because Lowe’s raised its guidance for the full financial year.

It now forecasts $97 billion to $98 billion in sales on $13.65 to $13.80 of adjusted per-share earnings. In comparison, analysts had called for $96.9 billion and $13.53, respectively. On CNBC’s “Squawk Box”, CEO Marvin Ellison said:

Average U.S. home is roughly 40 years old and when homes get older, there are things to fix. Two-thirds of what we sell is non-discretionary. If your roof is leaking or an appliance breaks down, you can’t choose to ignore it.

Lowe’s recently launched a costly Maytag Washer to deal with pet hairs and the strong demand for that expensive product, the chief executive added, is a testimony that the consumer is not trading down.

Although economic times are challenging, we still have roughly $1.20 trillion in excess savings versus pre-pandemic. You hear that people are trading down; that’s not happening in our space. Overall, we see customers trading up.

Lowe’s Companies Inc had a strong Halloween and the Christmas trends were keeping resilient as well, he added.

Key takeaways from Lowe’s Q3 earnings report

  • Earned $154 million versus the year-ago $1.896 billion
  • Per-share earnings also tanked from $2.73 to 25 cents
  • Adjusted for a $2.1 billion charge, EPS came in at $3.27
  • Sales went up 3.0% year-over-year to $23.5 billion
  • Consensus was $3.09 a share on $23.1 billion in sales

Same-store sales jumped 3.0% this quarter – well above expectations, as per the earnings press release. According to CEO Ellison:

In the third quarter, we saw do-it-yourself customers come back. We actually had the best DIY performance of the year in Q3. So, we’re seeing customers trade up for innovation. We’re seeing customers trade up even for discretionary items.

A day earlier, peer Home Depot also reported positive results for its latest financial quarter.

The post Lowe’s CEO says he saw customers ‘trading up’ in fiscal Q3 appeared first on Invezz.