- Lowe’s on Wednesday reported fourth-quarter net sales grew 5.2% year over year to $22.4 billion. The fourth quarter of 2022 consisted of 14 weeks, versus 13 weeks last year, resulting in a $1.4 billion boost to sales this year. Total comparable sales fell 1.5%, while U.S. comps fell 0.7%.
- The home improvement retailer’s operating income declined nearly 8% year over year to $1.7 billion, while its net income fell 20.6% to $957 million, according to a company press release.
- For the full year, Lowe’s reported net sales increased 0.8% from 2021 to $97 billion, while operating income decreased 16% and net income fell 24%.
Lowe’s delivered mixed results in its fourth quarter, beating both FactSet’s and Telsey Advisory Group’s earnings per share estimates, but falling short of their sales projections.
While net sales grew 5.2% during the period, this was mostly due to the extra week, which added $1.4 billion to sales. Without the benefit from the additional week, sales would have declined slightly year over year.
Lowe’s, like other home improvement retailers, benefited over the past several years amid a housing boom and an uptick in consumers taking on projects around the home. But as consumers pull back on discretionary spending in the face of inflation and other economic uncertainty, the sector is seeing that momentum fade.
Competitor Home Depot last week reported both its overall and U.S. comps fell 0.3% in the fourth quarter. But because of Lowe’s exposure among DIY customers — about 75% of sales compared to 60% of sales at Home Depot, according to Telsey Advisory Group — the North Carolina-based retailer may be feeling the effects of consumer pullback more.
For this reason, Lowe’s has been steadily working to attract more pros, a customer segment that Home Depot has historically held an advantage with.
Lowe’s executives said on Wednesday that pro customers continued to outpace DIY customers in the fourth quarter, reporting that this marked the 11th consecutive quarter of double-digit growth in the U.S. In the segment, the retailer delivered U.S. growth of 10% and 36% on a two-year basis, CEO Marvin Ellison said on a call with analysts.
“We're capitalizing on our momentum with our pros by growing our MVPs pro rewards and partnership program; building relationships through our CRM tool; and continuing to enhance our product assortment to meet pro needs,” Ellison said, adding that the retailer is bringing back Klein Tools to its assortment to further help it enhance its pro product offering.
While pro continued to grow during the quarter, it marked a slowdown from the third quarter where growth in the segment was 19%.
“In our view, this suggests that some of the heat is coming out of the construction sector as housing starts moderate and other activities wane,” GlobalData Managing Director Neil Saunders said in emailed comments. “This will likely continue into the new year, which means Lowe’s will be less able to rely on this side of the business to offset declining consumer demand.”
For the year ahead, Lowe’s expects total sales to be between $88 billion and $90 billion, while comps are projected to be flat to down 2% year over year. Operating margin is expected to be between 13.6% and 13.8%, and Lowe’s estimates capital expenditures of up to $2 billion.