Big-ticket spenders boost Lowe’s sales, shares jump

FILE PHOTO: Shoppers departs after visiting a Lowe's hardware store in Philadelphia

By Uday Sampath Kumar

(Reuters) -Lowe’s Cos Inc said on Wednesday that professional builders and handymen were rushing back to its stores, boosting sales at a time demand from the home improvement chain’s core do-it-yourself customers wanes, sending its shares up 11%.

The rollout of COVID-19 vaccines in the United States over the last few months has opened the doors for professional contractors to complete maintenance, repair and upgrade jobs that were put on hold by customers due to the pandemic.

As a result, sales of big-ticket items such as building equipment and materials have risen, helping offset a slowdown in paint sales and gardening tools that had surged when people were homebound.

This demand boost from “pro customers” helped the retailer report a 21% rise in second-quarter sales in the segment and forecast full-year revenue above Wall Street estimates.

Lowe’s predicted sales to professional customers, which can constitute up to a quarter of its business, would remain strong for the rest of the year and was optimistic that DIY demand will not peter out entirely.

“From a DIY perspective, I assume demand will mitigate a little bit, but it’s not going to fall off the floor either,” Chief Financial Officer David Denton said on an analyst call.

Lowe’s said it expects fiscal year 2021 total sales of about $92 billion, compared with analysts’ estimates of $91.58 billion.

The impact of the Delta variant of the coronavirus on the home improvement space had injected some uncertainty into the forecast Denton said, but added that sales trends so far in August had been strong.

Lowe’s same-store sales fell 1.6% in the second quarter, smaller than the 2.2% drop analysts had expected, according to Refinitiv IBES data.

Larger rival Home Depot reported a bigger-than-expected slowdown in U.S. sales on Tuesday.

The company’s net earnings of $4.25 per share, in the second quarter, above estimates of $4.01 per shares

(Reporting by Uday Sampath in Bengaluru; Editing by Vinay Dwivedi)